Again, downwards movement was expected. For the short term, a bounce was expected to begin about the lower edge of the channel on hourly charts. This is what happened at the end of Friday’s session after downwards movement.

Summary: A short-term target may now be at 1,464 or 1,420. A classic analysis target using the flag pattern is at 1,426.

The bearish Elliott wave count expects a new downwards trend to last one to several years has begun. Confidence in this view may be had if price makes a new low by any amount at any time frame below 1,346.45.

The bullish Elliott wave count expects a primary degree fourth wave is unfolding, forming a large consolidation to end in possibly 5 more sessions. The eventual area of support for the consolidation is expected to be about 1,431.

Grand SuperCycle analysis is here.

Monthly charts were last published here with video here.

BEARISH ELLIOTT WAVE COUNT

WEEKLY CHART

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It is possible that Super Cycle wave (b) is complete as a double zigzag.

The first zigzag in the double is labelled cycle wave w. The double is joined by a three in the opposite direction, a triangle labelled cycle wave x. The second zigzag in the double is labelled cycle wave y.

The purpose of the second zigzag in a double is to deepen the correction. Cycle wave y has achieved this purpose.

A new low below 1,346.45 would add strong confidence to this wave count. At that stage, the bullish Elliott wave count would be invalidated.

A wide best fit channel is added in light blue. This channel contains all of Super Cycle wave (b) and may provide resistance and support. Copy this channel over to daily charts.

DAILY CHART

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Within cycle wave y, the triangle that ended on the 17th of July may have been primary wave B. Primary wave C may have begun there. Primary wave C must subdivide as a five wave structure; it could be a complete impulse.

Within cycle wave y, there is no Fibonacci Ratio between primary waves A and C.

Draw a small channel about minor wave 2 using Elliott’s technique for a correction: draw the first trend line from the start of minute wave a to the end of minute wave b, then place a parallel copy on the end of minute wave a. The lower edge of this channel shows where price has bounced up at the end of Friday’s session. A breach of this channel by downwards movement on the hourly chart would be a strong indication that minor wave 2 should be over and minor wave 3 should then be underway.

HOURLY CHART

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Both hourly charts see minor 3 now underway.

For both wave counts, minor wave 3 may only subdivide as an impulse. Within the impulse, minute wave i may be complete. A bounce for minute wave ii may be relatively brief and shallow. Minute wave ii may not move beyond the start of minute wave i above 1,534.54.

When minute wave ii is complete, then a third wave down at two degrees should begin. This should exhibit an increase in downwards momentum.

BULLISH ELLIOTT WAVE COUNT

WEEKLY CHART

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This wave count sees the the bear market complete at the last major low for Gold in November 2015.

If Gold is in a new bull market, then it should begin with a five wave structure upwards on the weekly chart. However, the biggest problem with this wave count is the structure labelled cycle wave I because this wave count must see it as a five wave structure, but it looks more like a three wave structure.

Commodities often exhibit swift strong fifth waves that force the fourth wave corrections coming just prior and just after to be more brief and shallow than their counterpart second waves. It is unusual for a commodity to exhibit a quick second wave and a more time consuming fourth wave, and this is how cycle wave I is labelled. This wave count still suffers from this very substantial problem, and for this reason the bearish wave count is still considered because it has a better fit in terms of Elliott wave structure.

Cycle wave II subdivides well as a double combination: zigzag – X – expanded flat.

Cycle wave III may have begun. Within cycle wave III, primary waves 1 and 2 may now be complete. Primary wave 3 has now moved above the end of primary wave 1 meeting a core Elliott wave rule. It has now moved far enough to allow room for primary wave 4 to unfold and remain above primary wave 1 price territory. Primary wave 4 may not move into primary wave 1 price territory below 1,346.45.

Cycle wave III so far for this wave count would have been underway now for 58 weeks. It is beginning to exhibit some support from volume and increasing ATR. This wave count now has some support from classic technical analysis.

The channel drawn about cycle wave III is an adjusted Elliott channel. The lower edge is pulled lower. Primary wave 4 may find support about the lower edge.

Add the wide best fit channel to weekly and daily charts.

DAILY CHART

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Primary wave 4 may be continuing as an expanded flat, which is a common corrective structure. This would see alternation in structure with the zigzag of primary wave 2.

Primary wave 2 lasted 43 sessions. Primary wave 4 may be expected to be more brief; Gold usually exhibits more brief fourth waves than their counterpart second waves. Primary wave 4 may not exhibit a Fibonacci number in duration. It may be about even in duration with primary wave 2. So far primary wave 4 has lasted 32 sessions.

Within primary wave 4, it would be extremely likely for intermediate wave (C) to move at least slightly below the end of intermediate wave (A) at 1,481.91 to avoid a truncation and a very rare running flat. It would be most likely that primary wave 4 is incomplete because there is not yet a new low below 1,481.91.

Primary wave 4 may not move into primary wave 1 price territory below 1,346.45.

HOURLY CHART

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This wave count has a higher target for minor wave 3 to reach only equality in length with minor wave 1.

TECHNICAL ANALYSIS

WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

When trends reach very extreme, candlestick reversal patterns should be given weight. The Dark Cloud Cover bearish reversal pattern is given more bearish weight from the long upper wick.

The risk of a major high and a trend change or a large time consuming consolidation continuing here is very high. These two scenarios effectively follow the main bearish wave count (major trend change) or bullish wave count (a large time consuming consolidation).

A weak bearish signal from On Balance Volume adds confidence to this analysis.

This week completes an upwards week with a higher high and a higher low, but the candlestick has closed red and the balance of volume is down. Volume is pushing price lower. The longer upper wick on this weekly candlestick is also bearish.

DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

The flag no longer looks very clear. Friday did not effect a downwards breakout below the flag trend line. A target calculated from the flag pole would be about 1,426.

Volume remains fairly strongly bearish.

Price is range bound with resistance about 1,540 and support about 1,490. A breakout is required to indicate the next direction of a trend.

GDX WEEKLY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

This week saw price move higher with a higher high and a higher low, but the candlestick is red and the balance of volume is down. The longer upper wick is also bearish.

GDX DAILY CHART

Click chart to enlarge. Chart courtesy of StockCharts.com.

A target would be at 23.87. The breakaway gap for Friday’s open should offer resistance now at 28.09.

Published @ 10:05 p.m. EST.

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New updates to this analysis are in bold.