Another downwards day moves price slowly lower.

Both Elliott wave counts remain the same.

Summary: The main wave count now has a target for a downwards wave at 1,732 and an invalidation point at 1,677.64. The alternate wave count now has a target for a primary degree third wave down at 1,569 and a confidence point at 1,677.64. Use the upper edge of the base channel on the hourly chart for a guide to where bounces along the way down may find resistance.

If price invalidates the short-term hourly wave counts tomorrow with a new high above 1,823.69, then expect overall upwards movement towards a target at 1,853.07.

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.

Double flats are fairly rare structures. The probability of this wave count is further reduced.

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. Intermediate waves (A) and (B) within primary wave 2 may now both be complete.

It is possible that intermediate wave (B) may be complete as a single zigzag, as labelled, but it is also possible that it may continue higher as a double zigzag.

A target is calculated for intermediate wave (C). Intermediate wave (C) should at least make a new low below the end of intermediate wave (A) to avoid a truncation.

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

HOURLY CHART

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The wider blue Elliott channel drawn about intermediate wave (B) is now breached by downwards movement. This provides some confidence that intermediate wave (B) should be over.

A target is calculated for intermediate wave (C) to end.

Minor waves 1 and 2 within intermediate wave (C) may be over.

Minute wave ii within minor wave 3 may not move beyond the start of minute wave i above 1,823.69.

Draw a base channel about minor waves 1 and 2 as shown. Bounces along the way down within minor wave 3 may find resistance about the upper edge of this channel. Minor wave 3 should have the power to break below the lower edge of the channel.

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 waves 1 and 2 within cycle wave III may be complete.

Primary wave 3 may have begun. Within primary wave 3, no second wave correction may move beyond its start above 1,832.87.

A new low below 1,677.64 would invalidate the main Elliott wave count and add confidence in this alternate Elliott wave count.

HOURLY CHART

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A target is calculated for primary wave 3.

Minor waves 1 and 2 within primary wave 3 may now be over. Minute wave ii within minor wave 3 may not move beyond the start of minute wave i above 1,823.69.

Draw a base channel about minor waves 1 and 2 as shown. Bounces along the way down within minor wave 3 may find resistance about the upper edge of this channel. Minor wave 3 should have the power to break below the lower edge of the channel.

SECOND ALTERNATE DAILY CHART

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It is also possible that primary wave 2 may not be over and may continue higher as a double zigzag, to end closer to the 0.618 Fibonacci ratio of primary wave 1 at 1,853.07.

A new high tomorrow above 1,823.69 would see the hourly chart invalidated, so this alternate wave count would then be considered. 

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

TECHNICAL ANALYSIS

WEEKLY CHART

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

Range of the last four green weekly candlesticks is small. Volume has provided some support though and price has closed above prior resistance at 1,800. On Balance Volume gives a bullish signal.

It is possible that this bounce may continue a little further.

DAILY CHART

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

The bearish candlestick pattern in the Evening Doji Star is now followed by a downwards session that has a strong push from volume. This supports the bearish view of a potential trend change at the last high.

The last four sessions remain weak in terms of volume and range. Price remains above support at 1,800. On Balance Volume remains above support. The last four sessions now look like a potential pause within an ongoing upwards movement.

GDX WEEKLY CHART

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

An increase in volume for a downwards week and a bearish long upper wick suggest more downwards movement this week.

GDX DAILY CHART

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

Price is consolidating with resistance about 35 and support about 33.3. A breakout is required before confidence in the next direction may be had. Strong push from volume for downwards sessions and now weaker volume on an upwards session suggest a downwards breakout may come sooner rather than later.

Published @ 07:56 p.m. ET.

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New updates to this analysis are in bold.

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