Further downwards movement was expected to 1,768.47. The low for this session was at 1,769.89, just 1.42 short of the expectation.

A new alternate Elliott wave count is considered today.

Summary: The main wave count expects a small bounce here to be over fairly quickly and remain well below 1,845.37. Thereafter, a final low may be about 1,760. The upwards trend may then resume. A new low below 1,677.64 would see this main wave count invalidated and most likely discarded.

The first alternate wave count expects essentially the same movement as the main wave count.

A new alternate wave count is very bearish, a target is at 887. A new low below 1,677.64 would provide some confidence in this wave count.

Grand SuperCycle analysis and last monthly charts are here.

MAIN 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 may be a complete triple zigzag. Triple zigzags are not rare structures, but they are not common. The probability of this wave count is further reduced in Elliott wave terms. This is one reason why an alternate is still considered.

Cycle wave V may have begun. Within cycle wave V: Primary wave 1 may be over at the last high, and primary wave 2 may not move beyond the start of primary wave 1 below 1,677.64.

DAILY CHART

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A target is calculated for cycle wave V. If this target is wrong for this wave count, then it may be too low. As price approaches the target, if the structure is incomplete, then a higher target may be calculated.

Primary wave 1 within cycle wave V may be complete.

Primary wave 2 may be expected to most likely be a deep pullback lasting weeks. A new target for it is now at 1,760.

Primary wave 2 may not move beyond the start of primary wave 1 below 1,677.64.

HOURLY CHART

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Primary wave 2 may be underway and may be subdividing as a zigzag, which is by a wide margin the most common Elliott wave structure for a second wave.

Within primary wave 2: Intermediate waves (A) and (B) may be complete, and intermediate wave (C) may be extending. Intermediate wave (C) has passed both equality in length and 1.618 the length of intermediate wave (A). The next Fibonacci ratio in the sequence is used to calculate a target.

Within intermediate wave (C): Minor waves 1, 2 and 3 may all be complete, and minor wave 4 may not move into minor wave 1 price territory above 1,845.37.

Minor wave 4 may be a relatively brief and shallow bounce.

ALTERNATE ELLIOTT WAVE COUNT

WEEKLY CHART

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The bigger picture for this alternate Elliott wave count sees Gold as 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 reduced. 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 is so far deep and the structure looks incomplete; so far it is following a common pattern. Primary wave 2 may not move beyond the start of primary wave 1 above 2,070.78.

DAILY CHART

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Primary wave 2 may be subdividing as a zigzag. Within the zigzag: Intermediate wave (A) may be complete at the last high. Intermediate wave (B) may be continuing lower. Intermediate wave (B) may be an incomplete zigzag. A new target is calculated for it to end. Minor wave C has passed both equality in length and 1.618 the length of minor wave A. The next Fibonacci ratio in the sequence is used to calculate a target.

If intermediate wave (A) is correctly analysed as a five, then intermediate wave (B) may not move beyond its start below 1,677.64. A new low below 1,677.64 would indicate primary wave 2 should be relabelled as a complete single zigzag.

ALTERNATE DAILY CHART II

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The degree of labelling is moved up one degree from the end of Super Cycle wave (b) (seen on the weekly chart).

It is possible that cycle wave I within Super Cycle wave (c) was complete at the last low as a leading expanding diagonal.

Cycle wave II may also be complete as a deep single zigzag.

Current strong downwards movement may be the very early stages of cycle wave III. A target is calculated for cycle wave III.

TECHNICAL ANALYSIS

WEEKLY CHART

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

The upwards trend may have ended, for now. There is now a bearish candlestick reversal pattern in a Hanging Man that has bearish confirmation in the following candlestick.

DAILY CHART

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

Gold has lost over a month of gains in just a few days. Volume is very bearish. Range is increasing. On Balance Volume gives a bearish signal. Coming after the upwards trend reached very extreme (just), RSI reached overbought (but showed no bearish divergence to speak of) and a Bearish Engulfing pattern formed at the high. This is all together now a rather bearish picture.

But this downwards trend is now already extreme and RSI and Stochastics are near oversold. If next support about 1,765 is breached, then this downwards movement may end about 1,750.

GDX WEEKLY CHART

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

Next resistance is at 45.55.

An Evening Doji Star is now followed by another red candlestick that has some support from volume. This is bearish.

GDX DAILY CHART

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

The measuring gap gives a target at 33.78.

Following a very strong downwards day with a volume spike, normally price may react with some consolidation to relieve extreme conditions. The consolidation may last a couple to a very few days, and then downwards movement may resume to either next support or the target.

Published @ 07:20 p.m. ET.

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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.

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New updates to this analysis are in bold.

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