Last analysis expected both Elliott wave counts to see upwards movement today, which is exactly what happened.

Both Elliott wave counts remain the same and their targets are the same.

Summary: A multi-week to multi-month bounce may have begun. Some confidence in this view may now be had with a breach of the channel on the daily and hourly charts. 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 Fibonacci ratio between intermediate waves (A) and (C) may be used to calculate a target for intermediate wave (C).

Draw an Elliott channel about intermediate wave (A). This channel is now breached by upwards movement, indicating intermediate wave (B) should have arrived. 

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.

A breach of the trend channel by upwards movement now provides some confidence in a sustainable low.

Intermediate wave (B) may subdivide as any one of more than 23 possible corrective structures. By a wide margin the most common Elliott wave corrective structure is a zigzag, so that shall be how intermediate wave (B) is labelled at the start. As it continues, alternate Elliott wave counts may be required to consider other Elliott wave structures.

If intermediate wave (B) subdivides as a zigzag, then within it minor wave A must subdivide as a five wave motive structure, most likely an impulse.

If minor wave A is subdividing as an impulse, then within it minute waves i and ii may be complete. Minute wave iii may only subdivide as an impulse, and within it minuette waves (i) and (ii) may be complete. Minuette wave (iii) may only subdivide as an impulse, and within it subminuette wave i may be complete. 

Subminuette wave ii may not move beyond the start of subminuette wave i below 1,766.24.

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. Today the channel is now breached providing some confidence that primary wave 1 should be over and primary wave 2 may now be underway.

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.

Primary wave 2 may not move beyond the start of primary wave 1 above 1,915.42.

HOURLY CHART

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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.

If primary wave 2 subdivides as a zigzag, then intermediate wave (A) must subdivide as a five wave motive structure, most likely an impulse. 

If intermediate wave (A) subdivides as an impulse, then within it minor waves 1 and 3 may be complete. Minor wave 3 may only subdivide as an impulse. Within minor wave 3: Minute waves i and ii may be complete, and minute wave iii may only subdivide as an impulse. Within minute wave iii: Minuette wave (i) may be complete, and minuette wave (ii) may not move beyond the start of minuette wave (i) below 1,766.24.

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.

After the prior downwards trend reached extreme and RSI exhibited bullish divergence, some upwards or sideways movement may continue here to relieve extreme conditions. Look for resistance as identified on the chart; if Stochastics reaches overbought when price reaches resistance, then expect an upwards swing may complete there or shortly after.

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. This was met and slightly exceeded.

The pennant pattern is removed. It has not worked.

After the downwards trend reached extreme and RSI reached oversold then exhibited bullish divergence, a bounce or consolidation may now continue to relieve extreme conditions. Look for price to continue higher now towards next resistance; if it reaches resistance and Stochastics reaches overbought, then an upwards swing may end there or shortly after.

Published @ 06:44 p.m. ET.

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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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