A very small range day leaves all Elliott wave counts unchanged as price remains below the short-term invalidation point for the alternate Elliott wave count.

Summary: The first and second Elliott wave counts now expect upwards movement to 2,160.

A target calculated from the classic symmetrical triangle pattern for downwards movement is at 1,712. However, bullish long lower wicks and a Bullish Engulfing pattern on the daily chart now put this target into some doubt.

The alternate Elliott wave count now expects a downwards trend is underway. The next short-term target is at 1,837, and the invalidation point is at 1,908.38.

A new low below 1,764.12 at any time frame would invalidate the first daily chart and add confidence in an alternate daily chart. At that stage, a sustainable high would be in place and a new downwards trend to last months may be underway.

Grand SuperCycle analysis is here.

Last analysis of monthly charts is here with video here.

FIRST ELLIOTT WAVE COUNT

WEEKLY CHART

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The bigger picture for this first Elliott wave count sees Gold as still within a bear market, in a three steps back pattern that is labelled Grand Super Cycle wave IV on monthly charts. Grand Super Cycle wave IV may be subdividing as an expanded flat pattern. The common range for Super Cycle wave (b) within a flat is from 1 to 1.38 times the length of Super cycle wave (a), giving a range from 1,920.18 to 2,252.27. The target would see Super Cycle wave (b) end within this most common range.

Super Cycle wave (b) within Grand Super Cycle wave IV may be an incomplete double zigzag. When Super Cycle wave (b) may be complete, then this wave count expects Super Cycle wave (c) to begin and to move price below the end of Super Cycle wave (a) at 1,046.27.

The first zigzag in the double is labelled cycle wave w. The double is joined by a three in the opposite direction, a combination 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.

Primary wave C within cycle wave y may be subdividing as an impulse. Intermediate waves (1) through to (4) within primary wave C may be complete. If it continues any lower, then intermediate wave (4) may not move into intermediate wave (1) price territory below 1,764.12.

We should always assume the trend remains the same until proven otherwise. At this stage, Gold is in a bull market.

DAILY CHART

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The daily chart shows detail of primary wave C as an incomplete impulse.

Intermediate waves (1) through to (4) within primary wave C may be complete. Intermediate wave (4) may be a complete zigzag.

The channel is drawn as a best fit. The lower edge is breached by downwards movement, suggesting a trend change. The first alternate wave count below should be now more seriously considered.

Intermediate wave (2) was a shallow double zigzag, lasting 15 sessions. Intermediate wave (4) may be a complete zigzag. Minor wave B within intermediate wave (4) may have been a triangle. Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,764.12.

A new target is calculated for intermediate wave (5) that expects it to exhibit the most common Fibonacci ratio to intermediate wave (1).

HOURLY CHART

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Intermediate wave (4) may be a complete zigzag.

Minor wave 1 within intermediate wave (5) may be an incomplete impulse. Minute waves i and ii within minor wave 1 may be complete. Minuette wave (ii) within minute wave iii may not move beyond the start of minuette wave (i) below 1,850.83.

A new high now above 1,908.38 would add further confidence. At that stage, short-term labelling of the alternate wave count below would be invalidated.

ALTERNATE DAILY CHART

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It is also possible that a Super Cycle degree trend change has occurred at the last high. However, we should always assume the trend remains the same until proven otherwise. Assume the upwards trend remains in place and the main wave count is correct until the upwards trend is invalidated with a new low below 1,764.12. At that stage, this would become the main wave count.

Intermediate wave (2) may be a complete zigzag. Intermediate wave (3) may have begun.

There may be a series of three overlapping first and second waves to begin the new downwards trend. Price may now have moved through the middle of minor wave 3.

Fifth waves to end third waves one degree higher for Gold fairly often end with strength. This wave count may see strong downwards momentum and volume at the end of one or both of minute wave v to end minor wave 3, and minor wave 5 to end intermediate wave (3).

For the short term, minute wave iv may not move into minute wave i price territory above 1,908.38.

A target is now calculated for minor wave 3 to end. If this target is wrong, then it may not be low enough. A second target is now calculated at minute degree, which is updated again today. If price reaches the first target and either keeps falling or the structure is incomplete, then attention may turn to the second target.

When it arrives, primary wave 2 may not move beyond the start of primary wave 1 above 2,070.48.

Super Cycle wave (c) would be likely to make at least a slight new low below the end of Super Cycle wave (a) at 1,046.27 to avoid a truncation. If price provides confidence in this wave count with a new low below 1,764.12, then a target would be calculated for Super Cycle wave (c) to end.

ALTERNATE HOURLY CHART

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Minute wave iii may be complete.

The channel is redrawn about minor wave 3 as shown on the daily chart.

Minute wave iv may have continued a little higher today as a triple zigzag.

Minute wave v to end minor wave 3 may exhibit strength and may be extended.

Minute wave iv may not move into minute wave i price territory above 1,908.38.

SECOND 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 on 3 December 2015.

If Gold is in a new bull market, then it should begin with a five wave structure upwards on the weekly chart.

Cycle wave I fits as a five wave impulse with reasonably proportionate corrections for primary waves 2 and 4.

Cycle wave II fits as a double flat. However, within the first flat correction labelled primary wave W, this wave count needs to ignore what looks like an obvious triangle from July to September 2016 (this can be seen labelled as a triangle on the first wave count above). This movement must be labelled as a series of overlapping first and second waves. Ignoring this triangle reduces the probability of this wave count in Elliott wave terms.

Cycle wave III may be incomplete. Minor wave 4 within primary wave 5 may not move into minor wave 1 price territory below 1,764.12.

DAILY CHART

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Cycle wave III may be incomplete. The daily chart focusses on primary wave 5 within cycle wave III.

Minor wave 4 may be a complete zigzag. Minute wave b within the zigzag may be a complete triangle.

If minor wave 4 continues lower, then it may not move into minor wave 1 price territory below 1,764.12.

HOURLY CHART

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Minor wave 4 may be a complete zigzag. A target is calculated for minor wave 5 to end intermediate wave (3).

Minute wave i within minor wave 5 may be incomplete. Minuette waves (i) and (ii) within minute wave I may be complete. Subminuette wave ii within minuette wave (iii) may not move beyond the start of subminuette wave i below 1,850.83.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Price has broken out downwards from a small triangle last week. Look for next support about 1,800.

At the last high were two bearish candlestick patterns with overbought RSI exhibiting double bearish divergence. It is possible there may have been a 180° trend change at the high. A new swing low below 1,671.70 would add confidence in that view.

DAILY CHART

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There is a strong downwards breakout from the symmetrical triangle. A target calculated from the width of the base of the triangle is at 1,712.

From Kirkpatrick and Dhalquist regarding symmetrical triangles:

“Symmetrical triangles have many false breakouts and must be watched carefully…

Throwbacks… occur 37%… of the time, and, as in most patterns, when they occur, they detract from eventual performance. This implies that for actual investment or trading, the initial breakout should be acted upon, and if a pullback or throwback occurs, the protective stop should be tightened. It does not imply that a pullback or throwback should be ignored, but that instead, performance expectations should be less than if no pullback or throwback had occurred.

High volume on breakouts, both upward and downward, adds considerably to the performance of the formation and is something to look for. Overall performance is slightly below the mean for classic patterns.”

– Kirkpatrick, Charles D., II. Technical Analysis: The Complete Resource for Financial Market Technicians (p. 350). Pearson Education.

The small quick throwback on 22nd September may detract a little from the performance of this triangle, but this may be outweighed by the strong support from volume on the downwards breakout.

The Bullish Engulfing pattern has now been followed by another upwards day. A more time consuming throwback may be underway. Look for resistance at the lower edge of the triangle trend line. Volume remains light as price moves higher. The short-term volume profile suggests this upwards movement may be a counter trend bounce, which would support the alternate Elliott wave count.

GDX WEEKLY CHART

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Now two bearish candlestick reversal patterns in a Shooting Star and a Bearish Engulfing pattern indicate a trend change. With RSI reaching overbought at the high, these signals should be given weight. A trend change may be either a 180° change or a change to a sideways consolidation. With a downwards breakout last week from a small sideways pattern, the probability here of a 180° reversal and a new downwards trend has increased.

GDX DAILY CHART

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There is a downwards breakout from the triangle. A target is calculated from the width of the triangle at 32.55. The piercing pattern may indicate a throw back may have just begun. Upwards movement has reacted down from the lower edge of the triangle trend line. With weak volume and declining ATR, this looks like a throw back to test resistance. Expect upwards movement may halt here.

If price continues higher, then the target calculated from the triangle may not be expected to be met.

Published @ 06:40 p.m. ET.

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Careful risk management protects your trading account(s).

Follow my two Golden Rules:

1. Always trade with stops.

2. Risk only 1-5% of equity on any one trade.

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New updates to this analysis are in bold.