Upwards movement has continued exactly as expected.

Price is at the upper edge of the Elliott channel.

Summary: The main wave count is bullish. A new short-term target is now at 1,987. The longer-term target is at 2,094 although this may need to be revised higher.

An alternate Elliott wave count is considered, but it has a low probability. It expects upwards movement to continue here to a target at 1,940. The invalidation point for this alternate wave count is at 2,070.48.

If downwards movement develops from here, then it may be price reacting down from the upper edge of the trend channel. If this happens, then it may be a fourth wave to last a few days that may end within the price territory from 1,886.87 to 1,854.64. A reasonable target within this range may be 1,867.56.

Grand SuperCycle analysis and last monthly charts are here.

MAIN 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 may be a complete triple zigzag.

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.

A target is calculated for cycle wave V.

Primary wave 1 within cycle wave V may be incomplete.

Within primary wave 1: Intermediate waves (1) and (2) may be complete, and intermediate wave (3) may only subdivide as an impulse.

A target is now calculated for intermediate wave (3) that expects minor wave 5 within it to exhibit the most common Fibonacci ratio to minor wave 1.

Intermediate wave (4) may not move into intermediate wave (1) price territory below 1,739.19.

If downwards movement develops from here, then it may be price reacting down from the upper edge of the pink Elliott channel. If this happens, then intermediate wave (3) may be over, falling short of the target.

HOURLY CHART

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Minor wave 5 must subdivide as a five wave motive structure, most likely an impulse. Minute wave ii within minor wave 5 may not move beyond the start of minute wave i below 1,867.82. Minor wave 5 may unfold over a few days.

Minor wave 5 may find resistance at the upper edge of the pink Elliott channel. If it does, then it may have ended today, falling short of the target. The degree of labelling within minor wave 5 may need to be moved up one degree.

Sometimes for Gold its fifth waves to end third wave impulses one degree higher can be quite strong, so minor wave 5 may breach the upper edge of the pink Elliott channel and may exhibit an increase in momentum and volume.

If price invalidates this short-term wave count tomorrow with a new low below 1,867.82, then minor wave 5 and intermediate wave (3) may be over and intermediate wave (4) may continue for about two to four weeks. Intermediate wave (4) may end within the price territory of the fourth wave of one lesser degree. The price territory of minor wave 4 is from 1,886.87 to 1,854.64.

ALTERNATE ELLIOTT WAVE COUNT

WEEKLY CHART

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The bigger picture for this alternate 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).

Super Cycle wave (c) may have begun with a leading expanding diagonal for primary wave 1. Leading expanding diagonals in first wave positions are uncommon, so the probability of this wave count is low. However, it has a good fit and must be considered.

Second wave corrections to follow leading diagonals in first wave positions are usually very deep. Primary wave 2 may be expected to end at least about the 0.618 Fibonacci ratio at 1,920.42, and more likely a reasonable amount deeper than that. Primary wave 2 may not move beyond the start of primary wave 1 above 2,070.78.

DAILY CHART

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Intermediate wave (C) may be subdividing as an impulse. Minor wave 4 within intermediate wave (C) may not move into minor wave 1 price territory below 1,757.92.

A target is now calculated for intermediate wave (C).

Minor wave 3 within intermediate wave (C) may be over at today’s high. Minor wave 4 may now unfold over a few days to about two weeks. Minor wave 4 may end within the price territory of the fourth wave of one lesser degree. Minute wave iv has its price territory from 1,886.87 to 1,854.64; within this territory, the 0.236 Fibonacci ratio of minor wave 3 at 1,867.56 is a reasonable target.

TECHNICAL ANALYSIS

WEEKLY CHART

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

Price has closed above prior resistance at 1,800 with strong support from volume. The +DX line has crossed above the -DX line, indicating a potential trend change to upwards, but with ADX declining no clear trend is indicated.

Volume last week shows a slight decline as price moves higher, but overall remains relatively heavy. There is no bearish reversal pattern.

DAILY CHART

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

The upwards trend is now extreme and RSI is oversold. However, when Gold has a strong trend, these indicators may reach very extreme while price travels a considerable distance.

A doji today is concerning for the bullish case, especially as it comes with weak volume and declining ATR. While RSI is overbought and ADX is extreme, this indicates the risk here of a pullback or consolidation developing is reasonable. The doji on its own is not a bearish candlestick pattern. But if tomorrow completes a downwards session, which closes red and well within the real body of the candlestick of the 25th of May, then that would complete an Evening Doji Star.

GDX WEEKLY CHART

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

Next resistance is at 45.55.

Upwards movement continues. If there is an upwards trend, then the trend would be in its very early stages; there is plenty of room for it to continue.

GDX DAILY CHART

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

The trend is up. Next strong resistance is about 45.55.

The pennant has failed. This last session breached the pattern but did not close above it.  Overall, sideways movement of the last few sessions still looks most likely to be another consolidation within an ongoing upwards trend.

Published @ 07:31 p.m. ET.

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1. Always trade with stops.

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New updates to this analysis are in bold.