An inside day leaves the Elliott wave counts unchanged from yesterday at the daily chart level. On the hourly chart, a new limit for the short term is calculated.

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.

The next short-term target is still at 1,647. A long-term target is at 657. For the short term the current upwards bounce may end between 1,754.45 and 1,754.87.

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

Grand SuperCycle analysis  and last monthly charts are here.

FIRST ELLIOTT WAVE COUNT

WEEKLY CHART

Click chart to enlarge.

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

Click chart to enlarge.

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 both of 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.

Minute wave iv may be unfolding as a regular flat. Minuette waves (a) and (b) within minute wave iv both subdivide as threes. Minuette wave (b) is a 0.99 length of minuette wave (a). Minuette wave (c) within a regular flat would most likely end slightly above minuette wave (a) at 1,754.45.

Minute wave iv may not move into minute wave i price territory above 1,766.53.

HOURLY CHART

Click chart to enlarge.

Minuette wave (c) within a flat for minute wave iv must subdivide as a five wave motive structure; it would most likely subdivide as an impulse. Within the impulse: Subminuette waves i through to iv may be complete. If it continues further, then subminuette wave iv may not move into subminuette wave i price territory below 1,729.10.

Minuette wave (c) would be most likely to move at least slightly above the end of minuette wave (a) at 1,754.45 to avoid a truncation. If minuette wave (c) is correctly labelled, then within it subminuette wave iii is shorter than subminuette wave i. Because a core Elliott wave rule states that subminuette wave iii may not be the shortest of subminuette waves i, iii and v, this limits subminuette wave v to no longer than equality in length with subminuette wave iii at 1,754.87.

The channel about minuette wave (c) is redrawn now using Elliott’s first technique; the first trend line is drawn from the ends of subminuette waves i to iii, then a parallel copy is pulled lower to the end of subminuette wave ii. This channel has a more shallow slope than yesterday’s channel, so it has greater technical significance. If this channel is breached by downwards movement, then that may be an indication that minuette wave (c) may be over.

Minute wave iv may not move into minute wave i price territory above 1,766.53.

ALTERNATE DAILY CHART

Click chart to enlarge.

It is also possible that the flat correction unfolding may be labelled one degree higher. It may be minor wave 4.

Minor wave 4 may not move into minor wave 1 price territory above 1,849.22.

If the first daily chart is invalidated with a new high above 1,766.53, then this alternate would become the main wave count.

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 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

Click chart to enlarge.

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

Click chart to enlarge.

Intermediate wave (3) may now have begun. Within intermediate wave (3): Minor wave 1 may be incomplete, and minor wave 2 may not move beyond the start of minor wave 1 below 1,678.24.

Minute waves i through to iv within minor wave 1 may be complete. Minute wave v is limited now to no longer than equality in length with minute wave iii.

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.

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.

Last week completes a Hammer candlestick pattern. This may indicate either another bounce within an ongoing downwards trend or a trend change. A new swing high now above 1,754.20 would indicate a trend change; while that has not happened, then the dominant view should remain of a downwards trend.

DAILY CHART

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

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.

Overall, the lack of volume is concerning, particularly for the Bullish Engulfing pattern. Overall, volume continues to decline. This still looks to most likely be another bounce within an ongoing downwards trend.

Now a Hanging Man candlestick completes. The bullish implication of the long lower wick of a Hanging Man means that it is essentially a two candlestick pattern, so it needs confirmation with a red daily candlestick moving price lower to follow it before confidence may be had that it indicates a potential high in place.

GDX WEEKLY CHART

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

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 two weekly candlesticks have slightly bullish long lower wicks, and there may now be some push from volume to downwards movement. However, this last weekly candlestick has closed green, so daily volume bars should be viewed for a clearer view of the short-term volume profile.

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 at 33.49 is now closed. This may be a pattern gap within a larger consolidation.

The short-term volume profile at the daily chart level still looks bearish.

The absence of a bearish candlestick pattern in today’s candlestick suggests the bounce may not be quite over for GDX.

Published @ 06:00 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.