Another small range day continues a pause after strong movement.

The alternate Elliott wave counts have an increased probability, but price has not yet passed the confidence point required.

Summary: The strength of downwards movement strongly favours the alternate Elliott wave counts. They may have a higher probability now than the main wave counts. A new low below 1,849.22 would see the main wave counts discarded.

The first wave count is bearish for the bigger picture, and it has a main and an alternate daily chart. The main daily chart expects upwards movement. The alternate daily chart expects a multi-year bear market may be in its early stages to end below 1,046. The first short-term target is at 1,709. The first confidence point for this alternate remains at 1,849.22.

The second wave count is bullish for the bigger picture, and it has a main and an alternate daily chart. The main daily chart expects upwards movement (short term, both first and second wave counts have main daily charts which have the same expectation). The alternate daily chart expects a multi-month to multi-year bear market that may be in its early stages to possibly end about either 1,722.96 or 1,508.27.

Grand SuperCycle analysis is here.

Last analysis of monthly charts is here with video here.

FIRST ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

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, which is the most common structure for C waves. 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.

A best fit channel is drawn about primary wave C to contain as much of this movement as possible. Copy this channel over to daily charts.

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

DAILY CHART

Click chart to enlarge.

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 wide beige channel is copied over from the weekly chart. Price has now breached the channel. This channel breach favours the alternate wave count below.

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

If intermediate wave (4) is over as labelled, then within intermediate wave (5) minor wave 2 may not move beyond the start of minor wave1 below 1,849.22. For this reason, 1,849.22 remains an important confidence point for the alternate wave counts. A new low below 1,849.22 would see the main and alternate wave counts swapped over.

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

Intermediate wave (5) must subdivide as a five wave motive structure at minor degree. So far minor wave 1 may be complete, and minor wave 2 may have completed as an expanded flat.

HOURLY CHART

Click chart to enlarge.

Minor wave 2 may have completed as an expanded flat. If it continues any lower, then it may not move beyond the start of minor wave 1 below 1,849.22.

Minor wave 3 must subdivide as an impulse. Minute wave i within minor wave 3 may be complete. Minute wave ii may not move beyond the start of minute wave i below 1,853. Minute wave ii may now be a completed zigzag.

ALTERNATE DAILY CHART

Click chart to enlarge.

It is possible for this alternate wave count that a series of three first and second waves may be complete. A third wave down may now be developing strength.

Primary wave 2 within the new downwards trend may not move beyond the start of primary wave 1 above 2,070.48.

Minute wave ii may be a complete double zigzag.

Minute wave iii must move below the end of minute wave i at 1,849.22. It has not done this yet.

A new low below 1,849.22 would add initial confidence to this wave count. A new low below 1,764.12 would add reasonable confidence.

This wave count expects a further increase in downwards momentum. Either one or both of minuette wave (v) or minute wave v may end with a selling climax. Minuette wave (iv) and minute wave iv may be relatively brief and shallow.

ALTERNATE HOURLY CHART

Click chart to enlarge.

Minute wave iii may only subdivide as an impulse. Minuette wave (i) within the impulse may be complete at today’s low. Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,964.66.

Minuette wave (ii) may be relatively shallow as the strong pull downwards of a third wave at minute, minor and intermediate degrees develops further strength. Minuette wave (ii) may be an incomplete zigzag. Subminuette wave c within minuette wave (ii) would be likely to make at least a slight new high above the end of subminuette wave a at 1,888.76 to avoid a truncation. This may bring subminuette wave c up to end close to the 0.382 Fibonacci ratio of minuette wave (i).

SECOND ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

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.

A best fit channel is drawn about cycle wave III in the same way as the channel as on the first wave count.

DAILY CHART

Click chart to enlarge.

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.

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

Minor wave 5 must subdivide as a five wave motive structure. Within minor wave 5: minute wave i may be complete and minute wave ii may be a complete expanded flat. If it continues lower, then minute wave ii may not move beyond the start of minute wave i below 1,849.22.

A new low below 1,849.22 would see the main and alternate wave counts swapped over.

HOURLY CHART

Click chart to enlarge.

Minute wave ii may be a complete expanded flat. Downwards movement today may have been minuette wave (c) within the expanded flat. If minuette wave (c) continues any lower, then it may not take minute wave ii below the start of minute wave i at 1,849.22.

This wave count now expects a third wave up to begin.

ALTERNATE DAILY CHART

Click chart to enlarge.

It is possible that cycle wave III is complete and cycle wave IV is in its very early stages. This alternate wave count sees the impulse upwards of primary wave 5 complete.

Cycle wave IV may subdivide as any one of more than 23 Elliott wave corrective structures. It would most likely subdivide as a zigzag. A new bearish trend at cycle degree should begin with a five wave structure downwards at the daily chart level; this would be incomplete. No second wave correction within this first five down may move beyond the start of its first wave above 2,070.48.

Targets for cycle wave IV at this stage may be calculated from Fibonacci ratios of cycle wave III. Cycle wave IV may end at either one of the 0.382 Fibonacci ratio at 1,722.96 or the 0.618 Fibonacci ratio at 1,508.27. Cycle wave IV may not move into cycle wave I price territory below 1,303.51 (this can be seen on the weekly chart).

The short-term picture at the hourly chart level for this wave count looks exactly the same as the alternate hourly-chart for the first wave count.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Price has broken out downwards from a small triangle. 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.

Price and On Balance Volume are both at short-term resistance. This may halt a further rise in price.

DAILY CHART

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

An extremely strong downwards day has strong support from volume, increased ATR, a strong ADX bearish signal, and On Balance Volume turning down from resistance (which is adjusted).

Price has not closed below support. A close below support is required for confidence that the consolidation is over and the next trend is underway.

GDX WEEKLY CHART

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

The pullback may be over. An upwards trend may be ready to resume.

GDX DAILY CHART

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

A new downwards trend may have begun and may be in an early stage. Look for the possibility of bounces to occur about support lines.

Published @ 06:25 p.m. ET.

—

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.

—

New updates to this analysis are in bold.