Upwards movement is now just above the upper edge of a channel on daily and hourly charts.

Both Elliott wave counts remain valid.

Summary: The first wave count is bearish for the bigger picture and classic technical analysis supports this view. This wave count expects a multi-year bear market may be in its early stages to end below 1,046.

Downwards momentum may show a further increase. A short-term target is at 1,645, but this may not be low enough. A long-term target is at 657.

The second wave count is bullish. A new upwards wave may now have begun. The target is at 2,124.

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 now 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).

DAILY CHART

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Within a new bear market, cycle wave I may be an incomplete five wave impulse.

Cycle wave II within the new downwards trend may not move beyond the start of cycle wave I 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, minor wave 5 or intermediate 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. Draw the first trend line from the end of primary wave 1 to the last low, then place a parallel copy on the end of primary wave 2. Keep redrawing the channel as price continues lower. When primary wave 3 is complete, then this would be drawn using Elliott’s first technique and may show where primary wave 4 may find resistance.

The channel about minute wave iii is drawn using Elliott’s second technique. The first trend line is drawn from the ends of minuette waves (ii) to (iv), then a copy is pulled lower to the end of minuette wave (iii). Minuette wave (v) may end mid way within the channel or about its lower edge. Create a parallel copy of the upper edge of the channel and push it up to contain overshoots at the end of waves subminuette ii and micro 2, the swing highs of 29th January and 10th February. This trend line may indicate the next area of resistance. This is copied over to the hourly chart.

No second wave correction within minuette wave (v) may move beyond its start above 1,754.45.

HOURLY CHART

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Minuette wave (v) downwards may possibly exhibit an increase in momentum to end minute wave iii.

Minuette wave (v) would most likely subdivide as an impulse. Within minuette wave (v): Subminuette wave i may be complete.

The structure of subminuette wave ii may be incomplete. It may find resistance at the upper trend line, which is copied over from the daily chart. 

Subminuette wave ii may not move beyond the start of subminuette wave i above 1,754.45.

A target is calculated for minuette wave (v) to complete minute wave iii. This target expects the target on the daily chart for minor wave 3 to end is wrong.

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 second weekly chart on prior analysis here). 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 IV has moved lower; it may again be a complete triple zigzag. The rarity of triple zigzags reduces the probability of this wave count further.

If the third zigzag of primary wave Z continues lower, then cycle wave IV may not move into cycle wave I price territory below 1,303.51.

DAILY CHART

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Cycle wave IV may be a complete triple zigzag.

The purpose of multiple zigzags is to deepen a correction when the first zigzag does not move price deep enough. To achieve this purpose multiple zigzags normally have a clear counter trend slope. Cycle wave IV looks normal with a clear downwards slope.

A target is recalculated for cycle wave V. If cycle wave IV continues lower, then this target must again be recalculated.

A best fit channel is drawn about cycle wave IV. If this channel is breached by upwards movement with at least one full daily candlestick above and not touching the upper edge of the channel, then that may provide confidence in this second Elliott wave count.

HOURLY CHART

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Minor wave 2 may have continued lower as an expanded flat. All subdivisions within minor wave 2 may now be complete.

Minor wave 3 may now have begun. Within minor wave 3: Minute wave i may be almost complete, and a pullback for minute wave ii may not move beyond the start of minute wave i below 1,678.24.

TECHNICAL ANALYSIS

WEEKLY CHART

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

There is a series of lower swing lows and lower swing highs from the last all time high in August 2020. Downwards movement is now beginning to have a steeper slope. ADX now indicates a downwards trend at the weekly time frame, and price has made another important new swing low.

Neither ADX nor RSI are extreme. There is plenty of room for a downwards trend to continue.

A downwards trend should now be the dominant view until the trend reaches extreme and then a bullish candlestick reversal pattern is seen.

This chart supports the first Elliott wave count.

Within the prior upwards trend, the last major swing low is the week beginning June 1, 2020, at 1,671.70. So far price has not made a new low below this point. If price does make a new low below 1,671.70, then the view of a new downwards trend would be strengthened.

The last three weekly candlesticks lack range and support from volume. So far this looks like a small counter trend bounce.

DAILY CHART

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ADX may reach very extreme (over 45 and above both directional lines) before a trend in this market may end. It is currently declining, indicating no clear trend. But if it again increases, then it would again indicate an extreme downwards trend.

Another upwards day has weaker volume, which is bearish, but it still has a reasonable range. On Balance Volume gives a bullish signal. Overall, the lack of volume is concerning, particularly for the Bullish Engulfing pattern. This still looks like another counter trend bounce.

GDX WEEKLY CHART

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For GDX the last major swing low within the prior upwards trend is the low at 31.06 in the week beginning June 1, 2020. GDX has made a slight new low below this point. This is significant and supports the view that GDX may have had a trend change.

For confidence in a Morning Star reversal pattern the third candlestick should have support from volume. This one does not, so confidence may not be had in this pattern.

The last weekly candlestick has weak volume and a bullish long lower wick. The short-term bounce may not be over. However, it does look more likely to be complete at the daily chart level.

GDX DAILY CHART

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

Two Shooting Star bearish candlestick reversal patterns add weight to the possibility that the last bounce may be over and a downwards trend may resume.

A gap lower may provide resistance now at 33.49.

If price breaks below support at 31, then next support below from the weekly chart is about 26.3.

A further increase in volume for an upwards session is now bullish, so another bounce may have begun. However, the long upper wick today is bearish. Overall, a bounce here may remain below the last gap at 33.49 or below the last swing high at 34.48.

Published @ 06:57 p.m. ET.

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1. Always trade with stops.

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New updates to this analysis are in bold.