Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Labour vs Tory Manifesto Voter Bribes Impact on UK General Election Forecast - 6th Dec 19
Gold Price Forecast – Has the Recovery Finished? - 6th Dec 19
Precious Metals Ratio Charts - 6th Dec 19
Climate Emergency vs Labour Tree Felling Councils Reality - Sheffield General Election 2019 - 6th Dec 19
What Fake UK Unemployment Statistics Predict for General Election Result 2019 - 6th Dec 19
What UK CPI, RPI and REAL INFLATION Predict for General Election Result 2019 - 5th Dec 19
Supply Crunch Coming as Silver Miners Scale Back - 5th Dec 19
Gold Will Not Surpass Its 1980 Peak - 5th Dec 19
UK House Prices Most Accurate Predictor of UK General Elections - 2019 - 5th Dec 19
7 Year Cycles Can Be Powerful And Gold Just Started One - 5th Dec 19
Lib Dems Winning Election Leaflets War Against Labour - Sheffield Hallam 2019 - 5th Dec 19
Do you like to venture out? Test yourself and see what we propose for you - 5th Dec 19
Great Ways To Make Money Over Time - 5th Dec 19
Calculating Your Personal Cost If Stock, Bond and House Prices Return To Average - 4th Dec 19
Will Labour Government Plant More Tree's than Council's Like Sheffield Fell? - 4th Dec 19
What the UK Economy GDP Growth Rate Predicts for General Election 2019 - 4th Dec 19
Gold, Silver and Stock Market Big Picture: Seat Belts Tightened - 4th Dec 19
Online Presence: What You Need to Know About What Others Know About You - 4th Dec 19
New Company Tip: How To Turn Prospects into Customers with CRM Tech - 4th Dec 19
About To Relive The 2007 US Housing Market Real Estate Crash Again? - 3rd Dec 19
How Far Will Gold Reach Before the Upcoming Reversal? - 3rd Dec 19
Is The Current Stock Market Rally A True Valuation Rally or Euphoria? - 3rd Dec 19
Why Shale Oil Not Viable at $45WTI Anymore, OPEC Can Dictate Price Again - 3rd Dec 19
Lib Dem Election Dodgy Leaflets - Sheffield Hallam Battle General Election 2019 - 3rd Dec 19
Land Rover Discovery Sport Brake Pads Uneven Wear Dash Warning Message at 2mm Mark - 3rd Dec 19
The Rise and Evolution of Bitcoin - 3rd Dec 19
Virtual games and sport, which has one related to the other - 3rd Dec 19
The Narrative About Gold is Changing Again - 2nd Dec 19
Stock Market Liquidity & Volume Diminish – What Next? - 2nd Dec 19
A Complete Guide To Finding The Best CFD Broker - 2nd Dec 19
See You On The Dark Side Of The Moon - 2nd Dec 19
Will Lib Dems Win Sheffield Hallam From Labour? General Election 2019 - 2nd Dec 19
Stock Market Where Are We?  - 1st Dec 19
Will Labour's Insane Manifesto Spending Plans Bankrupt Britain? - 1st Dec 19
Labour vs Tory Manifesto Debt Fuelled Voter Bribes Impact on UK General Election - 30th Nov 19
Growing Inequality Unrest Threatens Mining Industry - 30th Nov 19
Conspiracy Theories Are Killing This Nation - 30th Nov 19
How to Clip a Budgies / Parakeets Wings, Cut / Trim Bird's Flight Feathers - 30th Nov 19
Hidden Failure of SIFI Banks - 29th Nov 19
Use the “Ferrari Pattern” to Predictably Make 431% with IPOs - 29th Nov 19
Tax-Loss Selling Drives Down Gold and Silver Junior Stock Prices - 29th Nov 19
We Are on the Brink of the Second Great Depression - 29th Nov 19
How to Spot REAL Amazon Black Friday Bargains and Avoid FAKE Sales - 29th Nov 19
Central Banks’ Gold Buying and Repatriation Spree - 28th Nov 19
Another Precious Metals’ Reversal Coming Right Up! - 28th Nov 19
Stock Market 100% Measured Moves May Signal A Top - 28th Nov 19
Don’t Look for Investing Advice in the Media - 28th Nov 19
Why You Should Buy Trailer Park Stocks - 28th Nov 19
Will YouGov General Election Forecast 2019 be as Wrong as their REAL Forecast was for 2017? - 28th Nov 19

Market Oracle FREE Newsletter

UK House prices predicting general election result

US Dollar, CRB, Oil, Gas, Copper and Gold - The Chartology of Deflation

Commodities / Commodities Trading Nov 23, 2015 - 11:06 AM GMT

By: Rambus_Chartology

Commodities

About a month or so ago I started posting regularly on the possible inflection point I was seeing in regards to the deflationary trend that has been on going since 2011. As you know stocks move from a reversal or consolidation pattern in an impulse move which is much different than a sideways chopping action of a reversal or consolidation pattern. Impulse moves are the stored up energy that is released once a reversal or consolidation pattern is finished doing its job. About four weeks ago it looked like the most recent consolidation phase was coming to an end which would then leave the door opened to an impulse move.

At the first writing of the possible inflection point the US dollar was still trading within the confines of its possible bullish falling wedge which I viewed as a consolidation pattern to the upside. Shortly after that first post on the possible inflection point the US dollar broke out of its bullish falling wedge and is now approaching its previous high just above 100 or so. The US dollar is the key driver for this deflationary spiral that has been in place for over four years now with no light at the end of the tunnel for the commodities complex yet.


You're probably getting tired of all the post on the US dollar but this is where the truth lies in regards to the falling commodities complex. Without a rising US dollar the deflationary scenario would not have a chance of playing out. Some of the more important commodities have now started their next impulse move lower which could very well be the capitulation phase where the baby is thrown out with the bathwater. If this is the beginning of the capitalization phase it should be relentless in nature whereby investors just throw up their hands in disgust and exit their positions at any price.

The first chart of many tonight is a short term one year daily chart for the US dollar that shows the bullish falling wedge in detail. The breakout was just a tad on the sloppy side but the top rail of the blue rectangle, that formed out toward the apex, held support which has led to the current move higher. As you can see the price action is approaching the high made back in March of this year which the US dollar will need to take out to confirm then next impulse move higher is truly underway. So far so good.

US Dollar Index Daily Chart

The longer term two year daily chart for the US dollar shows the previous impulse move up out of the five point blue rectangle reversal pattern in 2014. That impulse move created three smaller red consolidation patterns which is what one likes to see during a strong impulse move.

US Dollar Index Daily Chart 2

Below is a daily line chart which shows the previous impulse move up with a nice clean breakout and backtest of the bullish falling wedge. Again you can see the three smaller blue consolidation patterns that formed in that strong impulse move up.

US Dollar Index Daily Chart 3

This next chart is a 30 year monthly bar chart I showed you many times once the top rail of the blue bullish falling wedge was broken to the upside. This chart is a very important to understanding the longer time view. Note the breakout and backtest to the top rail of the 30 year bullish falling wedge which shows the small red bullish falling wedge which is the same falling wedge we just looked at on the daily charts above. Pieces of the puzzle.

US Dollar Index Monthly Chart

This next chart is a weekly combo chart which has the US dollar on top and gold on the bottom. Note how close the US dollar is to testing its recent high while gold is testing its recent low. If the US dollar is getting ready to breakout to a new high then it stands to reason that gold will break to new lows as the inverse correlation comes into play.

US Dollar Index Weekly Chart

If the US dollar can close out the month of November right where it's now it will be at a 13 year high on the long term monthly line chart and a new high for its bull market.

US Dollar Index Monthly Chart 2

Lets look at one last chart of the US dollar which is the monthly candlestick chart. This chart clearly shows that when the US dollar is in a strong impulse move up it will produce a string of white candlesticks and when it's in a strong impulse move down it will form a string of black candlesticks. The previous impulse move up created nine white monthly candlesticks in a row.

US Dollar Index Monthly Chart 3

If the US dollar is breaking out of a bullish falling wedge then there is a good chance that the $XEU is breaking out of a similar pattern only in the opposite direction. The long term monthly chart for the $XEU shows this to be true.

XEU Monthly Chart

The long term monthly chart for the $XEU shows a different pattern that has the same implications as the chart above if it breaks below the black dashed down slopping trendline which would be showing us this latest impulse move down is just halfway finished.

XEU Monthly Chart 2

If the US dollar is showing strength in here then we should see some weakness in some of the commodities indexes. The daily chart for the $CRB index shows it has broken down out of the blue bearish rising wedge complete with a backtest.

CRB Daily Chart

The monthly chart for the $CRB index shows it has broken down below the brown shaded S&R zone with a backtest to the underside currently testing its bear market lows.

CRB Monthly Chart

The very long term 60 year quarterly chart for the $CRB index now shows how close it's to breaking below the brown shaded support and resistance zone going all the way back to the early 1970's. That's pretty incredible when put it into perspective.

CRB Quarterly Chart

After breaking out from a five point black triangle reversal pattern as its bear market top the $GNX has created one consolidation pattern below the next showing us its bear market is still intact.

GNX Daily Chart

The DBC is probably the most actively traded commodities index to track. It too buillt out a black 5 point triangle reversal pattern as its bear market top. After breaking below the 2008 crash low the DBC then built out the red rectangle just below that very important support zone which has recently broken out to the downside making new all time lows.

DBC Monthly Chart

Lets now look at the most important commodity on the planet the $WTIC, oil index. The daily chart below shows a possible blue bearish falling wedge / H&S consolidation pattern forming. Last week oil was backtesting the neckline of a small H&S top that is forming the possible right shoulder.

WTIC Daily Chart

Below is a daily chart for oil which shows the possible stand along H&S consolidation pattern.

WTIC Daily Chart 2

If you recall I used this daily chart for oil to take our first short position when the price action rallied up into the top rail of the falling wedge and the bottom blue rail of the bearish rising wedge.

WTIC Daily Chart 3

Below is a weekly chart which is showing us two wedges. There is the smaller blue bearish rising wedge forming inside of the possible very large black bearish falling wedge.

WTIC Weekly Chart

The 20 year monthly chart for oil shows how the larger falling wedge fits into the bigger picture as a possible halfway pattern to the downside within a possible downtrend channel.

WTIC Monthly Chart

Natural Gas is another commodity that has taken it on the chin recently. The weekly chart shows a multi H&S topping pattern with a recent breakdown of the third neckline and a backtest to the underside last week.

Natural Gas Weekly Chart

The 10 year chart for natural gas shows a H&S top with a huge breakout black candlestick signaling the H&S top was completed. You can see how the red Diamond pattern is forming as a possible halfway pattern.

Natural Gas Monthly Chart

The very long term 25 year monthly chart for $NATGAS shows how the smaller H&S top, on the weekly chart above, fits into the big picture. As you can see it's just part of a massive topping pattern that actually topped out in 2005 or so.

Natural Gas Monthly Chart 2

Next lets look at several more important commodity charts that gives us a feel for how long this deflationary episode may play out at a minimum. The long term weekly chart for copper shows a massive seven point blue triangle reversal pattern that is the head portion of an even bigger H&S top. The backtest to the neckline formed the small red triangle consolidation pattern which just broke down two weeks ago. It looks like the next impulse move down has begun.

Copper Weekly Chart

The 20 year monthly chart for copper shows how the breakout from the six year H&S top is really just getting underway to the downside after completing the backtest.

Copper Monthly Chart

The 40 year quarterly chart for copper shows us a possible low on top of the massive black flat top triangle around the 1.47 area. As this is a quarterly chart you can see there is still some considerable time left for the 1.47 price objective to be reached.

Copper Quarterly Chart

The monthly chart for KOL, coal etf, shows it has really declined sharply since topping out in 2011 with a huge H&S top. It's now trading below its 2008 crash low.

Market Vectors Gold Miners Monthly Chart

There are a couple of long term charts I would like to show you that relate to the commodities being in a weakened state. The monthly chart for BHP shows it's in a well entrenched impulse move down.

BHP Monthly Chart


RIO looks like it's finishing up with the breakout and backtesting process of a massive H&S top formation. During the bull market years it formed a parabolic uptrend which came to an abrupt halt leading into the 2008 crash lows.

Rio Tinto Monthly Chart

POT is another stock that looks like it's completing a massive H&S top that has broken below its neckline.

Potash Corp Monthly Chart

X in the steel area shows it's closing in on its 2003 low.

US Steel Monthly Chart

I've been positing this long term chart for FCX since the second right shoulder was building out on the unbalanced H&S top.

Freeport Monthly Chart

The last chart for tonight will be a long term monthly chart for gold which formed a bearish expanding rising wedge formation as its bull market. We still have another week of trading yet but you can see the last bar on this chart is currently making an ever so slightly new low for this bear market.

What these charts suggest to me is that there is still plenty of room to move lower in the commodities complex before we see a significant turn around. Nothing goes straight up or down but as many of the charts above show most have massive topping patterns followed by downside breakouts that are in some cases just getting started. Going forward is going to be interesting to say the least. All the best.Rambus

Gold Monthly Chart

All the best

Gary (for Rambus Chartology)

http://rambus1.com

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

© 2015 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