Both Elliott wave counts yesterday had the same target and both today have the same trend channel. The expected direction for both the main Elliott wave count and the alternate Elliott wave count tomorrow is the same.

Summary: A multi-week to multi-month bounce may have begun, but confidence in this view may only be had with a breach of the channel on the daily and hourly charts. If that happens, then a target for resistance is at 1,814 or 1,853.

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. 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 an incomplete zigzag. Within primary wave 2: Intermediate wave (A) may be complete, and intermediate wave (B) may unfold over a few weeks. Thereafter, intermediate wave (C) may continue lower and should make a new low below the end of intermediate wave (A) to avoid a truncation. When the end of intermediate wave (B) and the start of intermediate wave (C) is known, then the Fiboancci ratio between intermedaite waves (A) and (C) may be used to calculate a target for intermediate wave (C).

Draw an Elliott channel about intermediate wave (A). When this channel is breached by upwards movement, then it would indicate intermediate wave (B) should have arrived. Although intermediate wave (A) at this stage is labelled complete the channel is not breached and confidence in this labelling may not be had until it is.

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

HOURLY CHART

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Intermediate wave (A) may be a complete impulse.

Fifth waves following fourth wave triangles for Gold can be surprisingly brief and short. The target given yesterday at 1,734 may have been wrong, it may have been too low.

The price point 1,773.91 is the low labelled minute wave i within minor wave 5. A new high above this point may not be minute wave iv, so at that stage it would be very likely that minor wave 5 should be over.

A breach of the trend channel by upwards movement is required for confidence in a sustainable low. 

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 cycle wave I. 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. Cycle wave II is deep and the structure may be complete; so far it is following a common pattern. If it continues higher, then cycle wave II may not move beyond the start of cycle wave I above 2,070.78.

DAILY CHART

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A target is calculated for cycle wave III.

Primary wave 1 within cycle wave III may be complete.

Draw an Elliott channel about primary wave 1. When this channel is breached by upwards movement, then that may be used as an indication that primary wave 1 should be over and primary wave 2 may then be underway. Today the channel is not yet breached. If primary wave 1 is over, then the channel may be breached tomorrow.

Primary wave 2 may last weeks to months. Targets for resistance are the 0.382 Fibonacci ratio at 1,814.54 and the 0.618 Fibonacci ratio at 1,853.07.

HOURLY CHART

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The triangle for intermediate wave (4) is relabelled. Intermediate wave (5) may be complete.

Primary wave 2 may unfold as any Elliott wave corrective structure except a triangle. The most common corrective structure by a wide margin is a zigzag. Primary wave 2 will be labelled as a possible zigzag, but alternate wave counts for alternate structures may be required in coming weeks.

Within the first five up, minute wave ii may not move beyond the start of minute wave i below 1,753.31.

TECHNICAL ANALYSIS

WEEKLY CHART

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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.

A small inside week is a small pause after the prior strong downwards week. This looks like a small pause within an ongoing downwards movement. If ADX increases, then it would give a strong bearish signal.

DAILY CHART

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Price has bounced up off support about 1,750. Now two long lower wicks on the last two last daily candlesticks are bullish.

A target calculated from the flag pole of the pennant is at 1,632. But bullish divergence between price and RSI, after RSI reached oversold, and a bullish Piercing pattern and candlestick wicks suggest this target may be too low.

GDX WEEKLY CHART

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A strong downwards week that has push from volume is followed by a small pause. This looks like a pause within an ongoing downwards trend.

GDX DAILY CHART

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The measuring gap gives a target at 33.78.

A target from the pennant pattern is at 29.41. This may not be met.

Published @ 06:15 p.m. ET.

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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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