Price has closed back within the channel on the daily chart. Both Elliott wave counts remain the same.

Summary: The first wave count is bearish for the bigger picture and has only one daily chart. This wave count expects a multi-year bear market may be in its early stages to end below 1,046. A short-term target is at 1,645. A long-term target is at 657. Some confidence may be had in this bearish wave count if price makes a new low below 1,766.53.

The second wave count is bullish for the bigger picture. It expects a multi-month to multi-year pullback or consolidation (within a larger bull market) may be in its early stages to possibly end about either 1,722.96 or 1,508.27.

An alternate daily chart for the second wave count considers the possibility that the pullback was over at the last low and the bull market for Gold has resumed to an initial target at 2,182.

Grand SuperCycle analysis is here.

Last analysis of monthly charts is 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.

Super Cycle wave (b) within Grand Super Cycle wave IV may be a complete double zigzag. This wave count expects Super Cycle wave (c) to move price below the end of Super Cycle wave (a) at 1,046.27 to avoid a truncation and a very rare running flat. The target calculated expects a common Fibonacci ratio for Super Cycle wave (c).

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.

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. This channel is now clearly breached, which suggests the upwards wave labelled cycle wave y may be over.

DAILY CHART

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Within a new bear market, primary wave 1 may be an incomplete five wave impulse.

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

Gold typically exhibits extended and strong fifth waves; this tendency is especially prevalent for fifth waves to end third wave impulses one degree higher. One or more of minuette wave (v), minute wave v and minor wave 5 may exhibit this tendency; there may be one or more selling climaxes along the way down. Minute wave iv and minor wave 4 may be relatively brief and shallow.

Draw an acceleration channel about downwards movement and keep redrawing the channel as price continues lower. Draw the first trend line from the end of intermediate wave (1) to the last low, then place a parallel copy on the end of intermediate wave (2). When intermediate wave (3) may be complete, then this channel would be drawn using Elliott’s technique about primary wave 1. If the upper edge of this channel provides resistance for minuette wave (ii), then minuette wave (ii) should be over. However, the upper edge of this channel was breached at the end of minute wave ii and yet price continued lower from there; the upper edge of the channel may not perfectly show were price finds resistance.

Draw a small Elliott channel about minuette wave (ii). When this small orange channel is breached by downwards movement, then that may provide reasonable confidence that this bounce is over and the downwards trend may then have resumed.

Minute wave iii may only subdivide as an impulse. Within the impulse: Minuette wave (i) may be over at the last low, and minuette wave (ii) may be complete as a single zigzag. If minuette wave (ii) continues higher as a double zigzag, then it may not move beyond the start of minuette wave (i) above 1,964.66.

A new low below 1,766.53 would add reasonable confidence to this wave count.

HOURLY CHART

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Copy the orange channel about minuette wave (ii) from the daily chart to the hourly chart.

This hourly chart looks at movement from the end of minuette wave (ii).

Price is back within the channel that contains minuette wave (ii). The channel breach was not sustained. This suggests we may not have reasonable confidence that minuette wave (ii) is over.

Because minuette wave (iv) may be relatively brief and shallow, a target is not calculated for minuette wave (iii). The target for minute wave iii at 1,645 (on the daily chart) may be where a more substantial bounce or consolidation may begin.

The next wave down is expected to be a third wave at multiple degrees for this wave count.

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 complete.

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

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Cycle wave III may be complete, and cycle wave IV may be underway.

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).

Primary wave A may be beginning with a series of four overlapping first and second waves: intermediate, minor, minute and now minuette.

Minuette wave (ii) may not move beyond the start of minuette wave (i) above 1,964.66.

The hourly chart for this second wave count would look exactly the same as the hourly chart for the first wave count.

ALTERNATE DAILY CHART

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It is possible that cycle wave IV may be over as a double zigzag.

As a first indicator of confidence in this wave count the best fit channel about cycle wave IV needs to be breached by at least one full daily candlestick above and not touching the upper edge. Thereafter, a new swing high above 1,964.66 would add reasonable confidence. Finally, a new all time high would add strong confidence to this wave count.

If cycle wave IV is complete, then it would have lasted only 17 weeks compared to 119 weeks for cycle wave II. While it is normal for Gold to exhibit fourth waves that are more brief than their counterpart second waves, a difference this great is unusual. This reduces the probability of this wave count.

ALTERNATE HOURLY CHART

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If the bull market has resumed for Gold, then a five wave structure should be complete off the last low. This is labelled minor wave 1.

Following a five up should be a three down, which is labelled minor wave 2. Minor wave 2 may have continued lower as a double zigzag. If it continues further, then minor wave 2 may not move beyond the start of minor wave 1 below 1,822.41.

TECHNICAL ANALYSIS

WEEKLY CHART

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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.

Downwards movement to the last low has relieved extreme conditions; it is also possible that the bull market for Gold has resumed. A new short-term swing high above 1,966.10 would add confidence in this view.

DAILY CHART

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Next support below is at 1,670 to 1,675.

From the high on the August 7, 2020, there is still a series of lower lows and lower highs, the basic definition of a downwards trend. For this view to change a new swing high above 1,966.10 would have to be seen.

Price is back within a strong zone of resistance and support with resistance about 1,940 and support about 1,850. For the short term, a bearish long upper wick and push lower from volume today suggest more downwards movement tomorrow.

Both price and On Balance Volume are again constrained.

For ADX the DX lines are whipsawing.

There is no clear trend and no sustained breakout.

GDX WEEKLY CHART

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If GDX makes a new swing high above 41.81 and On Balance Volume breaks above resistance, then the pullback of the last several weeks may be considered over.

GDX DAILY CHART

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Overall, from the high on August 5th, there is still a series of lower lows and lower highs, the basic definition of a downwards trend. For this view to change a new high above 41.81 would have to be seen.

The last gap is now closed by a strong downwards day, which has support from volume. It looks like another swing high may be in place for GDX. For the short term, an increase in volume for a downwards day that closes near lows for the session suggests more downwards movement in the short term.

Published @ 06:15 p.m. ET.

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New updates to this analysis are in bold.