Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
AI Tech Stocks Investing Portfolio Buying Levels and Valuations 2021 Explained - 2nd Mar 21
There’s A “Chip” Shortage: And TSMC Holds All The Cards - 2nd Mar 21
Why now might be a good time to buy gold and gold juniors - 2nd Mar 21
Silver Is Close To Something Big - 2nd Mar 21
Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective - 2nd Mar 21
Gold Stocks Spring Rally 2021 - 2nd Mar 21
US Housing Market Trend Forecast 2021 - 2nd Mar 21
Covid-19 Vaccinations US House Prices Trend Indicator 2021 - 2nd Mar 21
How blockchain technology will change the online casino - 2nd Mar 21
How Much PC RAM Memory is Good in 2021, 16gb, 32gb or 64gb? - 2nd Mar 21
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
THE INFLATION MEGA-TREND QE4EVER! - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Fourth Reversals in The Gold and Silver Charts

Commodities / Gold and Silver Stocks 2014 Apr 14, 2014 - 11:01 AM GMT

By: Rambus_Chartology

Commodities

In this Weekend Report I would like to look under the hood of some of the precious metals stocks indexes to see what is really taking place. We'll look at a bunch of PM stocks to get a feel for where we are in the short, intermediate and long term pictures. When one just observes an index you really don't get to see, in detail, the stocks that make up that index that could be showing some important clues to the overall big picture. For instance, there are just three or four of the biggest of the big cap precious metals stocks that account for a large percentage move for say the HUI. There are many more stocks in the index but they don't carry as much weight.


Before we look at some of the precious metals stocks I want to show you a combo chart that puts everything into perspective and gives you a feel for where we are in the intermediate term time frame. This combo chart has the HUI on top, GLD in the middle and SLV on the bottom. First I want you to look at the left hand side of the chart where you see that the HUI and silver each formed a blue triangle while gold formed a bullish rising wedge. Each consolidation pattern took the same amount of time to build and all three broke out together, first purple vertical dashed line. Note the impulse move out of the blue patterns that show SLV leading the way higher as GLD and the HUI had a backtest while SLV didn't. Here's where it gets interesting. As you can see SLV rallied straight up to its bull market top way ahead of the HUI and gold that were lagging behind, second thin purple vertical dashed line. After a few months of consolidation it was gold's turn to go parabolic and make its bull market high in September of 2011. The heavy purple dashed line shows where all three topped out together with the HUI and gold making their bull market highs while SLV was already in correction by falling way short of reaching its bull market top that it made back in April.

What was so frustrating for those of us that were holding precious metals stocks is that they hardly moved when gold and silver had their parabolic moves higher. As you can see the HUI did in fact make its bull market high at the same time gold did but the HUI had no parabolic move up. As you can see it was more of a slightly rising horizontal type move. That had to be one of the worst times to be a gold bug, to see gold and silver go parabolic and the precious metals stocks hardly budging. I'll post this chart here so you can see the blue consolidation patterns on the left side of the chart then we'll discuss the red consolidation patterns on the right side of the chart.



Let's not fast forward to the heavy red dashed vertical line that shows how the HUI was the first of the three to really show weakness by breaking below its horizontal black dashed line first. The precious metals stocks were leading he way down. It took about another 12 weeks or so before GLD and SLV joined the party to the downside when they finally broke out of their nearly 22 month consolidation patterns with a breakout gap. As with the blue consolidation patterns on the left side of the chart our current red consolidation patterns all bottomed at the same time, late June of 2013, and have been chopping out their respective chart patterns ever since. As you can see all three are working on their fourth reversal points right now. Even though the HUI is building out a falling flag formation, which will be pretty bearish if it breaks through the bottom rail, the SLV is trading the closest to its bottom rail of its red triangle. This chart gives you the big picture look and lets you know where we stand and what to look for.

One last comment before we move on. As you know reverse symmetry plays a big role in how I interpret the price action. Until something changes, I'm viewing the blue consolidation patterns, that formed on the left side of the chart with the price action going up, equal to the red triangles on the right side of the chart with the price action going down as reverse symmetry. Since the bull market top in 2011 you can see a series of lower lows and lower highs all the way down to our current price which is just the complete opposite of what we seen in the bull market years. Until we can see a higher low and a higher high the downtrend remains intact.



Lets take a quick peek at our red consolidation patterns starting with the HUI. Here we see the blue falling flag that is working on its fourth reversal point down. As you can see we had an important test of horizontal resistance last week at the 236 area. Also note the big impulse move down that has led to the formation of our current consolidation pattern that I will view as a halfway pattern if the bottom rail is broken to the downside. The HUI should show a similar move that led into our current blue falling flag when the price action leaves, thus this pattern will show up between the two impulse legs down.



Below is gold's blue triangle that is showing the most strength right now between the three. It to is working on its fourth reversal point to the downside. Keep in mind these potential consolidation patterns won't be complete until their bottom rails are decisively broken to the downside. I expect there will be a very big down day once the possible breakouts occurs that will leaves no doubt as to what just happened.



Below is silver's potential blue triangle that is trading the closest to the bottom blue rail. The 18.50 area on the bottom blue rail will be critical support.



Lets now put our blue consolidation patterns in perspective so you can see how they fit into the big picture. This first chart is for the HUI, which is a long term weekly line chart, that goes all the way back to the beginning of the bull market. Keep in mind a line chart only uses the closing price so the patterns will look slightly different. There is a lot of good information on this chart that we can use to help us understand where we are in the big picture. First notice all the blue consolidation patterns that formed during the bull market years, one on top of the other. That's a bull market folks. Next notice our massive H&S top that reversed the bull market and has led to our current price. We are now reversing symmetry down and what I believe is our first consolidation pattern to the downside with its blue counterpart on the left side of the chart. Next lets look at the fanlines which is a chart pattern. The rule of thumb is when the 3rd fanline is broken to the downside is when you get your big move. Note fanline #1 and #2 that have the green circle around where the fanline and the neckline intersect. Once that area was broken to the downside the HUI wasted little time declining in earnest. Some of our long term subscribers may remember this chart as I was showing it as we were watching the neckline and fanline #2 breaking down. A daily bar chart will show there was a small backtest to the underside of the neckline before the impulse move began.



Lets now look at gold's potential triangle and how it may fit into the bigger picture. Gold's potential triangle has formed on top of the neckline extension rail that is taken off of the 2008 H&S consolidation pattern in which I extended all the way to the right hand side of the chart. Are we seeing reverse symmetry with our current red triangle vs the red bullish rising wedge that formed in the uptrend on opposite side of the chart?



If someone can look at this weekly chart for silver and tell me silver is in an uptrend I would have to call them crazy. Just look at the price action on the left side of the chart when silver was going parabolic creating a series of higher highs and higher lows all the way up to its bull market top. Now compare that price action to the right hand side of the chart since silver topped out just under 50 in April of 2011. Silver has now completed three years of its bear market, this month, by creating lower lows and lower highs. This is basic elementary Chartology. Maybe something will happen to create a new higher high and higher low but until that happens the major trend is down and that is the best direction to trade unless you're a day trader. It's always the easiest to trade in the same direction of the major trend as it can fix a mistake if you bought at the wrong time. Just the opposite in a bull market.



So far we looked at the HUI, gold and silver potential consolidation patterns on the short term to longer term look charts. Now we need to look under the hood and see what some of the precious metals stocks are showing us to help bolster these possible consolidation patterns as having some validity. What we have forming on some of the precious metals stocks are several different consolidation patterns ranging from triangles. expanding triangles, rectangles and rising wedges

Editors Note: This Portion of tonight's Weekend Report engaging the Chartology of 10 Individual Stocks is for Subscribers .

In Summary

There are many more charts I could post but I think you get the picture of what I'm trying to show you. By looking under the hood you can get a totally different perspective than just looking at an index. These charts give me the confidence to hang on to our game play when I know many are in doubt. So far nothing is broken from a Chartology perspective which is why we are still short. Until something changes, this is the way I will stay and hopefully we will be able to catch another big impulse move down. I believed we are positioned very well especially if these fourth reversal points hold on these nine month consolidation patterns.

All the best

Gary (for Rambus Chartology)

http://rambus1.com

FREE TRIAL - http://rambus1.com/?page_id=10

© 2014 Copyright Rambus- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Rambus Chartology Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules