Rambus Chartology is Primarily a Goldbug TA Site where you can watch Rambus follow the markets on a daily basis and learn a great deal of Hands on Chartology from Rambus Tutorials and Question and Answers .
Most Members are Staunch Goldbugs who have seen Rambus in action from the 2007 to 2008 period … and now Here at Rambus Chartology since early 2012 where he has prepared us for this debilitating PM smackdown.
What is he seeing now ?
In this weekend report I would like to answer some questions presented at the forum this weekend. First lets look at silver and see what the charts are telling us especially after last weeks price action. Lets start with a daily look that shows the downtrend channel that began back in October of last year. You can see all the different chart patterns we’ve been following during this delcine. You can see what happens when a strong support rail gives way. The bulls were exhausted and the bears took charged and moved the price down to the 22 area where we are getting our first counter trend rally after the breakout.
This next daily chart is the one I showed you on Friday night that shows the parabolic arc and the backtest to the 25.60 area. There are a lot of resistance points in that red circle that should hold any rally in check. If for some reason silver cuts through that overhead resistance that would be a warning flag that silver is stronger than what the chart are saying right now. It’s just something to keep in the back of your mind.
The weekly chart shows a classic 6 point rectangle consolidation pattern. Point #4 is the only flaw where the price action poked above the top blue rail during the week but close the week below the top blue rail so I view that as an aberration. The backtest will come in at the 26 area where the bottom rail should now reverse its role from what was support to now resistance.
The monthly look shows the major uptrend channel for the bull market that started back in 2002 after finally breaking out of the blue 4 year bullish falling wedge. At the top right hand side of the chart you can see our current downtrend channel that started off the 50 all time high made 2 years ago this month. You can see that this monthly chart is showing lower lows and lower highs which is the definition of a downtrend. If silver trades within the parallel downtrend channel all the way down to the bottom rail of the major uptrend channel, silver could fall as low as 16 where the two bottom rails intersect. That would give the RSI indicator, at the top of the chart, a chance to reach the area of the two previous major lows at 36.50 purple arrows. If it did play out close to what the charts are showing and silver bottomed out at the bottom rail of the big uptrend channel that would still leave the bull market intact. I would have to consider that area a major buying opportunity.
Next I would like to show you several weekly chartS for SLV that show two different type of consolidation patterns, that fit with the Chartology of chart patterns. The first weekly chart for SLV shows the 8 point diamond consolidation pattern that we’ve been following since the first of the year.
Produced December 21 2012
So far its played out beautifully making lower lows. The big blue diamond gave us an early indication that the big 20 month rectangle was going to break to the downside. You can see the diamond broke out in the middle of December of last year at 31.50 a full 5 1/2 points higher that where the big rectangle broke out at 26 or so.
This next weekly chart for SLV shows another consolidation pattern that also makes sense from a Chartology perspective. First lets look at the parallel downtrend channel that shows 2 red circles toward the top. Those two red circles show what I call, Symmetry Failures. Failures to reach the top and bottom rails of the downtrend channel. These are impossible to see early on. It’s only after the downtrend channel starts to mature that you can finally recognize them as such. It’s always important to tweak your trendlines once you have more information to work with. Now lets look at blue bearish falling wedge that broke out two weeks ago with that huge gap. Whenever you see a gap and, Especially on a weekly chart, it’s always good to pay attention. Many times the gaps will show up at breakout points. That gap made 2 weeks ago on this chart also shows up on many of the precious metals stocks as well. The backtest would come in around the 24.75 area. The brown shade area shows the minimum price objective down to the 17.80 to 18.35 based on two measuring techniques I use.
Lets take a look at the US dollar that shows it consolidating in a loose rectangle just above the brown shaded support and resistance zone. I call it loose because the top rail is sloppy, but you can see the trading range that has completed 4 reversal points and is now trading halfway down to the lower trendline. It’s trading smack dab in the middle of the rectangle right now. Usually the US dollar charts shows fairly nice tight trading ranges but lately they have seemed a little sloppy to me. The patterns are there but harder to define for most folks. The price objective for the red rectangle halfway pattern would be around the 86.25 area which will help our EUO trade.
The next chart shows why the US dollar is trading in this rectangle trading range. It’s basically trapped between the top brown shaded support and resistance zone and the brown shaded support and resistance zone I showed you on the chart above which is the top point of the 5 point triangle reversal pattern.
I posted this next chart the day the US dollar broke out of the 5 point triangle reversal pattern. The blue shaded area shows where the US dollar and gold were trading on that day. As you can see the inverse relationship is still alive and well. I think once the dollar breaks out above the red rectangle gold will be finishing up with its counter trend rally.
Lets take a look at the weekly log scale chart for the HUI that shows the weekly gap is still in play as the HUI failed to close it completely this week. The black rectangles measures time and price. If the bottom of the halfway gap plays out similar to the top half then the HUI could reach the bottom around the 160 area in October of this year based on both halves being equal.
Here is an interesting observation. On the chart above I showed you how the 2 rectangles each measured time and price from the halfway gap that gave us a price objective down to the 160 area in October of this year. This next chart I’ve shown you before that shows the reverse symmetry taking place from the rally off the 2008 low to the height of the left shoulder. What is interesting is that the 2 rectangles on the chart below are unrelated to the two rectangles that measures the halfway gap. As you can see on the chart below both charts come up with the 160 price target in October of this year using 2 completely different scenarios.
On a positive note lets look at the very long term 30 year chart for Silver that shows two massive inverse H&S bottoms. This month the price action has come down and is testing the big neckline #2 which comes in around 23 the area. If silver ever closes below neckline #2, on a monthly basis, that would that would be bearish. If this big base holds then silver is going considerably higher as shown at the top of the chart. The main thing right now is to watch the price action on the shorter term charts and see how the bottoms of the consolidation patterns that I showed you earlier, hold up. If we start to see prices breaking above some of those bottom rails on the 20 month rectangle or the bottom rail of the bearish falling wedge then we will need to re-evaluate the situation accordingly. Silver will talk to us, we just have to listen.
Below is a 30 year line chart for silver that shows the backtest still in progress down to the 21 area on a monthly closing basis.
This last chart I would like to show you is a long term look at gold using an 8 year low followed by an 11 year high cycle chart that the Aden sisters posted back on June 22, 2010. Their chart shows up at the end of the article.
After studying and seeing their chart I built my own chart so I could follow the 8 and 11 year cycles as they described them. Last year, in February was when the next 11 year cycle top was supposed to come due. At the time I noted it on my chart and just observed to see what would happen. I knew if the 11 year cycle high was in place that some sort of top should also be in place. Two weeks ago when gold had the big breakout move down, that confirmed for me, that the 11 year cycle high must be in place even though a whole year went by before the breakout came. You can now see the top, clear as day, on the chart below.
Oh I almost forgot for those inquiring about a Gold Target I posted this as the Friday Nite Chart:
Usually on Friday night I’ll post a few charts that may be interesting to the current environment. Tonight lets look at an old, long term, 6 year daily line chart for gold that shows a H&S consolidation pattern that formed back at the crash low in 2008. It was one of the most symmetrical H&S patterns I ever charted. It’s hard to tell from this long term look but it was a thing of beauty. It’s hard to remember for some but the gold neckline came in at 1005 as shown by the blue and red arrows. I’ve extended the neckline, brown shaded area, all the way to the right side of the chart. If I was looking for the ultimate support zone it would have to be the brown shaded neckline.
I hope these charts gets everyone up to speed as to where we are and where we might be headed. The best I can tell right now is that the last quarter of this year looks like a decent place to see a good bottom for the precious metals complex. We might get more clues as this decline matures. We might see a consolidation pattern or two form before we bottom out that may give us a little insight. Right now, with the information we have, October through to December looks ripe for a time and price objective that could yield a good low. I’ll show you a few more things in the Wednesday Report that I’m looking at that might shed some more light on the bottom area later this year. All the best…Rambus
Rambus Chartology is Primarily a Goldbug TA Site where you can watch Rambus follow the markets on a daily basis and learn a great deal of Hands on Chartology from Rambus Tutorials and Question and Answers .
Most Members are Staunch Goldbugs who have seen Rambus in action from the 2007 to 2008 period … and now Here at Rambus Chartology since early 2012
where he has prepared us for this debilitating PM smackdown.
What is he seeing now ?
Insomnia is setting in after reading Rambus Ultimate Targets tonite
As a Goldbug these targets are devastating !
As a Trader (Darth Trader)…I am trying to remember this from a Rambus Post This past February (hard to believe its only 2 short months ago)
“The easiest and hardest thing trading this decline, once it starts, will be to ride the trend lower without getting kicked off. Easiest in that you don’t have to do anything but stay in your position. The hardest because it will be very difficult to ride out the volatility. When you look at the charts above it looks easy to ride the move down to the H&S price objectives but when your living through it it’s an altogether different thing. Once below the necklines the volatility will increase dramatically where there could easily be a 100 point swing in the HUI. I expect to see at least one good consolidation pattern form that may show up halfway down to the price objects. Another possibility is there could be a series 2 or 3 smaller consolidation patterns form before the bottom is reached. Its time when one has to get mentally ready for what could be the ride of a lifetime if things work out as expected. The big money will be made by those that can stay with the trend and not panic every time there is a rally. Easier said than done.
all the best
Goodnight Chartologists where ever you are
I was going to write this article several weeks ago but the move in gold took the spotlight and I had to put this on the back burner. Now that gold has settled down a bit I would like to show you some charts that pertain to the Risk On trade that are showing commodities entering a weak period. By the looks of some of the commodity charts it looks like some deflation is on the way. Even with all the money printing it doesn’t seem like enough to stem another round of weakening commodity prices. So lets see what the charts are telling us.
The US dollar is key if we are about to enter the Risk On trade. If you recall the dollar sky rocketed during that bout of deflation as precious metals, commodities and the basic materials stocks fell on hard times in 2008. I know there is a lot of talk about inflation taking off but as the charts below will show, now doesn’t look like the time we have to worry about the inflation scenario.
The US dollar has been making a series of higher lows since the bottom in the summer of 2011. Late last year and early this year the US dollar made a double bottom which is now the head portion of a H&S consolidation pattern. The dollar is still working on the right shoulder but when the neckline gets broken to the upside that will start putting pressure on commodities and basic materials. A break above 84 should get the ball rolling.
This next chart is a weekly long term combo chart with gold on top and the dollar on the bottom. Note the purple dashed vertical lines with the purple arrows. What that shows us is how the dollar refused to make a new lower low while gold went on its parabolic run to 1920. This was a major positive divergence for the US dollar to gold. Note the big rounding base the dollar has been carving out while gold has been trending down. It’s not perfect but you can see the inverse correlation between the two. A break above that long term black dashed support and resistance rail at 86 will really put pressure on gold and the rest of the Risk On trades.
Lets take a look at one more chart for the dollar that is a long term monthly look that shows the huge base that is getting close to completing. You can see, on the chart below, there was a big base built back in the late 80′s and early 90′s, labeled big base #1 that led to a multi year rally in the dollar. Notice how similar the two big bases are. Once the dollar breaks out above the support and resistance rail, the big base #2 will be complete. Keep in mind this is a monthly chart so the move is not going to be a flash in the pan type of event but a multi year rally.
Lets look at the CCI commodities index that is showing the price action has been trading within an expanding downtrend channel since toping in the spring of 2011. The 20 and 50 week moving averages are just about ready to cross that will give a sell signal.
The very long term weekly look at the CCI shows some very nice chartology that I used during the initial bull market off the 2002 bottom. I’m still amazed by the random walk of the stock markets that can create such beautiful symmetry and patterns that can be used to help take out a lot of the noise that keeps many investors confused.
The old CRB index is breaking down from a small H&S consolidation pattern within its expanding downtrend channel.
The DBB Multi- Sector Commodities Trust Metals Fund has broken out of a very nice H&S top and is in the process of making new multi year lows.
Copper plays a big role in the Risk On trade. The weekly chart below shows the small H&S at the top of the chart that reversed the uptrend that began off the 2008 bottom. The big blue triangle is just the first consolidation pattern that has formed since the downtrend began. If your looking for inflation you don’t want to see this commodity fall in price.
The long term monthly chart for copper is very interesting as it shows a big unbalanced H&S top that has just recently broken out. That’s a big top by any standard. It should have enough energy to move the price of copper down to the 2008 lows. Note the big negative divergences on the RSI on the top of the chart and the MACD on the bottom. Just think of the neckline as a line in the sand, above positive and below negative. Keep it simple.
The COPX broke out, with a gap, of a very symmetrical triangle consolidation pattern this week. There could be a backtest to the bottom blue rail at 10.75 before the move down begins in earnest.
The IYM is your Basic Materials etf that looks like it’s completing an unbalanced double top. It had a breakout gap on Monday along with many other stocks and is now in the process of backtesting the double top trendline at 67.30 or so. This one really needs to breakdown for the Risk On trade to gather momentum to the downside. We’ll see if the backtest now holds as resistance.
I’ve been following this H&S top for KOL, coal etf, for what seems like an eternity. As you can see after breaking down through the neckline the price action has been testing the neckline from below for a year or better. It now looks like it’s finally starting to break a little harder to the downside. That’s another very larger H&S top that resembles alot of the precious metals stocks.
Lets look at the SLX which is a steel etf that just broke out of a pretty symmetrical triangle this past week. Note the small H&S at the top of the chart that reversed the uptrend off the 2008 bottom. This is Chartology at its best.
If we are truly entering another period of Risk On trades, Oil needs to participate along with the rest of the commodities complex. Oil broke out of a symmetrical triangle a week or so ago. Note the little H&S top that formed at the apex of the blue triangle that tipped us off that the triangle was going to break to the downside. Here a clue there a clue and pretty soon a picture starts to emerge.
The second to the last chart I would like to show is a weekly chart for Oil that is showing a very large H&S topping pattern that will have a big impact on the Risk On trades. As I showed you the small H&S top, on the daily chart above, that gave us a clue that the triangle was going to break to the downside, we now have a similar setup with this weekly Oil chart. Here you can see the breakout of the blue triangle is giving us an early warning that the big neckline is going to get broken to the downside.
I want to leave you with a very long term chart for gold that I have now labeled as having put in a very large unbalanced double top. It pains me to do this, as I know most Chartology Members are first and foremost Goldbugs, but I can’t argue with what the price action is showing. Until last week we still didn’t know for sure if the trading action below the 1920 area was a consolidation pattern to the upside or a topping pattern. There is now no doubt that gold has put in a major top that is going to take alot of time to turn things around. As you can see on the long term monthly chart gold has now put in a series of lower highs and lower lows which is a downtrend, Chartology 101. This chart shows exactly how a market that has gone parabolic, which some will disagree with me, breaks down. Last weeks major sell off has trapped many gold investors who bought into the unbalanced double top area, which will now be looking for a place to sell on any strength. Normally in these type of situations the market won’t be very obliging and will inflict much pain for those that don’t recognize or understand what is taking place.
What these charts above are telling me is that inflation isn’t on the horizon right now. We need to be concerned about another bout of deflation and gear our portfolios to take advantage of that scenario. All the big H&S topping patterns that have shown up in the precious metals stocks, oil and many other commodities are telling us this isn’t going to end anytime soon. The US dollar is on the verge of breaking out of a huge base that is telling us this could be a multi year event and not just a flash in the pan. I hope the charts, I presented in this article, paint a clear picture of what lies ahead for us, regardless of how some interpret the fundamentals to be inflationary. The charts don’t lie but the misinterpretation of the charts can lead many astray. Knowing how the battles between the bulls and the bears show up as a consolidation pattern or a top or bottom, can give one an edge if one can read between the lines and keep an open mind. All the best…Rambus
Rambus Chartology is Primarily a Goldbug TA Site where you can watch Rambus follow the markets on a daily basis and learn a great deal of Hands on Chartology from Rambus Tutorials and Question and Answers .
Most Members are Staunch Goldbugs who have seen Rambus in action from the 2007 to 2008 period … and now Here at Rambus Chartology since early 2012 .
What is he seeing now ?
This has been an exciting week at Rambus Chartology
Rambus Last Weekend’s Post “Precious Metals : Apocalypse Now ? ”
Which was picked up at Safehaven . Gold Seek . Gold-Eagle. Goldtent . Market Oracle.. Kitco and other fine PM sites
has opened some eyes
This is as good a time as any to explain who we are and how we happened !
Our Website was started December 2011
At first Rambus Chartology was know only to those at Goldtent (www.goldtent.com)
Which by the way is the best damn Gold Site On the Net !
6 Years running self supported No Advertising No Bull Shit Free Bulletin Board with some of the finest and brightest Goldbugs
you could ever get to know…And a cast of real interesting characters !
2.5 million Hits a month…thousands of lurkers and hundreds of posters !
Rambus was posting there and was a cherished member in 2007 and 2008
we loved him as he showed Continuation pattern after Continuation pattern and Gold rose strongly as did Silver and the PM Stocks
…….All was right with the gold World……
Then Rambus switched course ! egad !
Some damn thing about a breakdown that he didn’t like the looks of …but of course no goldbug could see
..long story short ..Rambus called the HUI 150 bottom…(his target was 160)…a long time before it happened
but when he posted his now famous “What If” post (linked at the Wizard of Rambus ) we started to challenge his work
all of a sudden his shoulders weren’t big enough on his heads…his trendlines were arbitrary…and he took a lot of criticism from Us
and no one participated more than Fullgoldcrown !
So he did what any self respecting Chartologist would do
he took his Bullish Rising Wedges and 11 Point Diamond Topping Patterns and went home…Ozark Mountains Arkansas !
2008 2009 2010 came and went ..and Goldtent was thriving…but every so often someone would say..I wonder whatever happened to that guy Rambus
He was so annoying but so right ?
anyhow after 3 long years in self appointed exile….. Dave (Rambus) contacted me and said
he was reading ” The Tent” and was concerned again that everyone was all in but there was again potential trouble on the horizon
He sent free charts for me to post there..but goldbugs being goldbugs…we weren’t really listening
I Encouraged Dave to Start his own site…and told him if you Build It They will come .
I am sure you longer term members all agree .. his work is unique
He was reluctant to go through the drama and trauma at first but thankfully he hooked up with Audept
who is The other Tech WIZARD on the site..
Audept is the Goldtent Site Creator and Webmaster
who also created this evolving Rambus Chartology Site !
Look for his voice interviews coming to the site some day soon !
So who is Rambus ?
Just a good old down home country boy who happens to have a Wizard like knack for Charting Market Psychology (Chartology)
and for being able to teach (preach) these principles in a very enlightening entertaining and informal manner
I would describe him as a humble strait shooting teacher who learned his principles out of a book …the old fashioned way…then practiced and failed
with sharp pencil and paper and ruler until he compiled enough knowledge to learn to spot things like 11 point topping patterns that are absolutely Invisible to anyone else
(See the Diamond In the Rough post at the Wizard of Rambus)
His Handle Rambus derives from his favorite trading stock of the tech mania
which he played until 2002 when he fell in love with the Gold Sector
Dave has told me PMs have the BEST and most concise Chartology patterns of all the sectors
Alas he is Not a Goldbug. He Doesn’t concern himelf at all with manipulation…its all in the charts anyhow
I of course furiously debate him on this point. But my take is..the manipulation is a source of supply and its baked into the cake too .
Personally I am a Goldbug to the Nth degree… but I decided I didn’t want to replay 2008 as I watched my pf loose 80%…as remote a possibility as that seemed to be
So How does a Goldbug like me rationalize being Darth Traitor…Holding DUST instead of NUGTs ?
Like This :
We all thought we would buy PM Stocks for the leverage…The Idea of course was to.. at the right time when Precious metals stocks go Nucken Futz
sell em and buy Physical
the leverage was expected to be 3 to 5 times
How has that been working for us goldbugs ?
But NOW…I believe I have become a Wizard too !
I have just cashed some profits made in DUST this week and bought some really cheaply priced Gold Maple Leafs
This is Alchemy .. turning Dust into Gold !!!
This site also has 1 more participant without who we could not thrive
Mrs Rambus…Chief Financial Officer Extrodinaire
(Behind every successful man is his CFO
So that’s who we are and that’s how we got here and we are really excited to be attracting so many
who are willing to do the time and learn this method to Improve their trading skills
One of our mottos has evolved to :
“Give a Man a Chart and he will Thrive for a Day
Teach a man to Chart and he Thrives for a lifetime”
In Keeping with the Wizardry on the Site…we invite you all to use the Chartology Forum for banter and questions with Rambus and other members
Speaking of members here is some input from a new member we just received
This is what it all about folks :
About Myself XXXX
Retired USAF physician now living in Greece. Knoxville Tennessee was my stateside home and I am still an enthusiastic Vol football fan ,even if they have fallen on hard times lately. A proud grandfather of 4 gorgeous(could they be anything but in my eyes)girls aged 4 to 12 . I want some help to manage a portfolio for their college education and am optimistic that your site will help me achieve such
Thank you all for joining us and as Rambus Says “Let the Games Begin”
Fullgoldcrown (For Rambus Chartology)
In this Weekend Report I would like to take an unbiased look at the precious metals complex that has been showing substantial weakness since the October highs of last year. I’m going to show you some charts, further along in this article, that will shed some light on what is really taking place right now. Keeping an open mind is key to being successful in the markets.
This week marked the breakout of gold from the very large 20 month rectangle that finally let us know that the big sideways trading range is in fact a consolidation pattern to the downside and not a reversal pattern to the upside. The breakout was classic from a Chartology perspective. You can see on the the chart below there was a very large daily bar that was created on Friday April 12, 2013 on heavy volume. A breakout like this shows the bulls were exhausted and the bears are back in charge. The bulls had no fight left and are now in retreat looking for the next place in which to try and establish some support. It’s possible that we may see a backtest to the bottom blue rail of the large rectangle that will now reverse its role from support to resistance before the move lower begins in earnest.
Next lets look at the silver rectangle that shows a very similar setup to gold. As gold broke significantly below the bottom rail of its rectangle silver is just barely cracking its bottom rail at this time. The three fanline pattern, starting off point #5, is giving us a heads up that silver will break below its bottom blue rail. Also like gold you can see an even number of reversal points, six, that tells us this is a consolidation pattern to the downside. Another clue that this pattern is a consolidation pattern to the downside is that it has formed below the previous high. In order for this pattern to be a reversal pattern to the upside it would need an odd number of reversal points such as 5, 7 or more. The evidence is mounting for a consolidation pattern to the downside.
Now that we can see that gold and silver have broken out from their respective six point rectangles lets look at the HUI and see if the precious metals stocks are in a confirmed downtrend like gold and silver. This next chart shows a huge H&S topping pattern for the HUI that broke down in February of this year a full two months before gold and silver did. The precious metals stocks are leading the way down for gold and silver that puts the whole complex in a confirmed downtrend or cyclical bear market.
Next I would like to look at some shorter term charts for gold, silver, and some precious metals stocks that will show how bad the situation really is for this sector. I just want to say right here, before we look at the charts to follow, that the Chartology you are about to see is what it is and it’s just my interpretation of what the charts are showing me. Many of you will be in denial and will not accept what these charts are saying and that’s fine. Just use them as part of your overall view of the what your own interpretation of the precious complex is and take it from there.
The first chart I would like to show you is a daily look at gold that is showing a parabolic downtrend that has been forming since the important high made in October of 2012. Most of the time all we here about is the parabolic moves to the upside that happen on a much larger scale. Parabolic moves can also happen in the short term charts as this daily chart shows.
Now I would like to show the the same chart that shows why this parabolic move lower is developing the way it is. You can see there have been three smaller chart formations that have formed one below the next that is creating the parabolic downtrend. Many are trying to put straight trendlines on their charts trying to show a downtrend channel which isn’t working very well. As you can see the curved trendline was hit four days ago along with the backtest to the small red triangle that has led to this most recent decline.
Silver has a beautiful looking parabolic downtrend that started to form off its double top high back in October of 2012. Again you can see how each smaller red consolidation pattern has formed below the previous one creating the curved downtrend rail when the tops are connected. You can also see that silver has cracked the all important bottom support rail at 26.
The precious metals stocks are several months ahead of gold and silver and are showing a strong parabolic downtrend well in progress. The Chartology, of this daily chart for the HUI, shows all the smaller consolidation patterns that have formed off the October high made last year. From a Chartology perspective this chart is as good as it gets. We have been following this beautiful downtrend channel since the breakout from the black 5 point bearish falling wedge reversal pattern. Some say I show too many chart patterns that are unnecessary but from my perspective each and every consolidation formation is giving us an important clue to the bigger picture. If you study each consolidation pattern, on the chart below, you will see each one has at least four reversal points which is what you have to have to form a consolidation pattern at a minimum. Sometimes there are six, eight or more and as long as there are an even number of reversal points you will have a consolidation pattern that will breakout in the direction of the move leading into the consolidation pattern.
Lets look at a weekly chart that shows a parabolic downtrend that happened back in the later part of the 1990′s on CDE. You can see all the clean touches that occurred on the curved downtrend rail. Try to put a straight trendline where the parabolic trendline is and see what you get.
Lets now look at some individual precious metals stocks that exhibiting some parabolic downtrends. ABX is the biggest precious metals producer and is showing an accelerating parabolic downtrend, that started back in August of 2011. ABX has also broken out from the massive H&S top that few are willing to recognize even at this point in time. Denial can make an investor broke faster than anyway I know.
Lets look at the monthly chart, for the biggest cap precious metals stock, that really puts things into perspective regardless of how one may perceive the fundamentals. This chart isn’t lying but the the strong fundamentals, that so many are espousing for the precious metals complex are.
ASA is showing a very large parabolic downtrend that stated all the way back in October of 2010.
The monthly look at ASA shows a double H&S top formation that is in the third month of breakout.
AU is showing us a parabolic downtrend that started in October of 2010 which now seems to be accelerating to the downside.
In conjunction with the parabolic downtrend channel AU has also broken out of its own massive H&S topping pattern.
Lets look at one more precious metals stock that has an accelerating parabolic downtrend that started last October of 2012. As you can see it has lost well over 50% of its value since the parabolic downtrend began.
The weekly chart for AUNFF shows its topping pattern as the five point triangle reversal pattern.
I could show you countless other precious metals stocks with the same characteristics as the ones above. We don’t have to beat our heads against the wall to figure out why the precious metals complex is so weak right now. All we have to do is follow the price action and everything else becomes irrelevant. This is the beauty of Chartology. It doesn’t make any difference what the fundamentalist say or how short or long the commercials are, who’s buying and selling the precious metals, or how the stockpiles are falling to such low levels. It’s all baked in to the price action that shows up on charts. How one interprets this price action is an entirely different story. Some use Elliot Wave and some use cycles to interpret the charts. For me, following the price action, by looking for patterns that form consolidation or reversal patterns is the purest form for analyzing a stock or index as the charts above show. Just one simple trendline on a chart, think neckline on the ABX chart above, can mean the difference between success or failure. Above the neckline and the chart is positive and below is negative.
It still amazes me how this old school of charting is still relevant in this day and age with all the high powered computer programs out there that are trying find an edge in the markets. Understanding the price action between the bulls and the bears is a never ending story that goes back to the beginning of the stock markets. Its the interpretation of these battles, in the form of consolidation or topping patterns, is all that is needed to be on the right side of the markets more than on the wrong side. And that is the bottom line. To be right more than you are wrong. All the best…Rambus
EDITOR’S NOTE :
Rambus Chartology is Primarily a Goldbug TA Site where Members watch Rambus follow the markets on a daily basis and learn a great deal of Hands on Chartology from Rambus Tutorials and Question and Answers .
Most Members are Staunch Goldbugs who have seen Rambus in action from the 2007 to 2008 period at www.goldtent.org and now Here at Rambus Chartology since early 2012 .
What is he seeing Now ?
With today’s breakout of the huge 20 month rectangle for gold, tonight would be a good time to take another look, and see what has led up to this important breakout. This first chart is one I posted at the beginning of March when gold was trading at point #3. I put those black arrows on this chart to show you where I thought we should at least get one more reversal up to point #4? that was just below the brown shaded support and resistance zone. Some of you may remember this chart when I was looking for the 1620 area for a possible 4th reversal point. Sometimes the last reversal point in a rectangle will hit the middle of the rectangle before the actual breakout begins, red horizontal trendline As you can see this was the case this week.
This next chart is a longer term daily look that shows all the consolidation patterns that have formed since the last high at 1800. Today’s price action shows a classic breakout of a major chart pattern, the 20 month rectangle. The red rectangle had a measured move down to 1475 which we hit today. That last red rectangle strongly suggested that the breakout of the big 20 month rectangle was going to happen because the price objective of the red rectangle was roughly 50 points below the bottom rail of the 20 month rectangle. It should not surprise you if we now get a backtest to the underside of the big rectangle at 1530 before the price moves lower. Possible but no guarantee.
We finally got our answer to the question asked from the chart below.
This last chart shows the best case scenario for gold. If the 20 month rectangle is a halfway pattern then the price objective would come in around the 1392 to 1435 area. This is just one scenario of several scenarios that are in the play book right now. Stay tuned as today marks a potential turning point for gold. All the best…Rambus
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United Arab Emirates (Dubai)
In this past Weekend Report,” Gold Bulls Do or Die”,
I showed a daily chart for the GLD that showed a parabolic downtrend forming. That was the first time I posted that chart. GLD was in the process of backtesting the triangle that had been forming since the end of February. The backtest was a little strong, which happens sometimes, but with the brown shaded gap area and the latest rail of the parabolic downtrend channel, just above the bottom rail of the triangle, I thought there was a good chance that the GLD would fill the gap and touch the new downtrend rail one last time before the GLD started the next impulse leg down. Below is the undated chart for the GLD that shows yesterday’s price action did in fact trade slightly above the bottom red rail of the triangle, closing the gap and bouncing off the newest rail of the parabolic downtrend channel. I can guarantee you won’t find a chart like that anywhere on the planet just here at Rambus Chartology.
“Sir starr posted an article on the Chartology Forum, “Comex Gold Inventories Collapsed by the Largest Amount Ever on Record.”
Since I began trading the bull market in the precious metals complex, in the spring of 2002, I can’t even begin to count how many articles have been written on why its time to back up the truck because of this reason or that reason. There is no doubt that the precious metals, not so much the pm stocks, have been the best place in which to be invested for the last 12 years or so. Last October there was a paradigm shift from the precious metals stocks to the stock markets, as I have shown you. Most of these types of articles are written by analysts that will never tell you to sell. All they do is tell you why you must buy and buy right now or you will get left behind and lose a fortune. They are good at what they write and very convincing which is why so many goldbugs are still hanging on to their losing positions right now. You think you felt some pain today. What if you have been riding this decline all the way down from the October highs because some analysis told you the precious metals stocks were going to the moon because of the strong fundamentals. Instead of a moon shot most of the goldbugs have had a trip to hell looking for someone to blame because THEY said the fundamentals were so strong that the precious metals stocks couldn’t go down. If you follow the price action you don’t have to worry about what this analyst or that goldbug guru has to say. You will be able to look right through their bull crap and decide for yourself which is the best way to go.”
Rambus March 9 2013
I was going to write about the Risk on Risk off trade this weekend but with the big move up in gold on Friday I thought we should look at gold instead. As you know, gold along with silver, broke down from their respective triangles this week which we have been keeping a close eye on. The 60 minute chart below shows the price action for the last six months or so for GLD. You can see the downtrend has been picture perfect so far with lower highs and lower lows all the way down. The price action broke below the bottom rail of the blue triangle early this week and had a strong rally, that so far, has taken the price back up to the underside of the bottom rail as the backtest. This is normal behavior. What I’ll be watching very close is how the GLD interacts with the bottom blue rail of the triangle. If the price action starts trading up and into the blue triangle that will mean we have a bigger consolidation pattern forming which will still be a consolidation pattern just a bit bigger at this time.
The daily chart shows all the chart patterns that have formed since the October high last year. You can see how critical this backtest is right now to the underside of the red triangle. Again if the price action can trade above the bottom red rail that would be short term bullish for gold. A failure right here would confirm the red triangle as a valid consolidation pattern. So we wait.
Lets look at another daily chart for the GLD that shows a potential horizontal trading range similar to the one that formed just above our current one. Sometimes a horizontal trading ranges can be a little sloppy where the price action can trade slightly below or above the horizontal rails and then move right back in to the rectangle. If the backtest doesn’t hold on the triangle pattern, that I showed you on the chart above, then I would expect a more horizontal trading range to progress with a move up to the top red rail around the 156.50 area.
Next lets look at a 2 year daily line chart that shows the big horizontal trading range that gold has been in since the fall of 2011. As you can see the price action is testing the bottom of the big 20 month rectangle. This daily line chart shows a little different chart pattern vs the bar charts above. The little red ascending triangle shows a backtest would come in around the 155 area. I will also be keeping a close eye on the brown shaded support zone, bottom of rectangle, as that has been major support for 20 months or so. We should have a clearer picture in a week or so as to what direction gold wants to go. For right now nothing is broken in regards to our DGLD trade.
There is a daily chart for the GLD that I haven’t shown you yet that is showing a parabolic downtrend channel that started off the October 2012 high. Silver also is showing the same parabolic downtrend channel. There is a gap just above Friday’s price action that may get filled this week. The gap could get filled and the GLD could still stay below the last downtrend rail which would be perfect. Again it looks like an interesting week ahead.
The five year chart for the GLD shows the price action trading well below the three most important moving averages. To really turn gold positive these moving averages will have to be broken to the upside to launch a new bull leg.
A weekly chart for the GLD shows the price action bouncing off the apex of an old triangle that was in play for some time before prices fell to the bottom blue trendline. It’s still an important area as there are two trendlines that intersect at the 149 area. If the price action does break below the apex that would be very negative for gold.
This next weekly look at the GLD shows the 2008 uptrend channel with all the smaller red consolidation patterns that formed during that advance. You can see how perfect the blue rectangle is with the price action testing the bottom blue rail this week. The rectangle is a completed pattern that still hasn’t told us yet which way it will breakout. As it has formed below the all time high made back in the fall of 2011 the odds favor a breakout through the bottom of the rectangle. Those are the odds but if the GLD starts to rally above the 65 week moving average then we would have to reconsider. For right now a bounce should be expected as everyone and their brother knows this is the bottom of the trading range. The big question is, How Strong are the Bulls? This is where talk is cheap. The bulls need to walk the walk and show us they mean business.
I would like to leave you with one last chart that is a combo chart showing gold and top and silver on the bottom. The blue shaded area shows how each moved to their bull market highs at different times. As you can see silver reached its parabolic high first in April of 2011 while gold languished. There was about a 2 month correction and then gold took off to make its all time high at 1920 while silver fell way short of reaching its all time high made in April. This was a major negative divergence between gold and silver. When I look at this chart it tells me they both got their parabolic move albeit at different times and that a good correction was at hand. As you can see once they both had their highs in place they declined sharply together to point #1 on their blue rectangles. They have been trading in lockstep, for the most part, for the better part of 20 months or so. Both are testing the bottom blue rail of their respective rectangles as we speak.
We are at a very important juncture right here where the gold bugs will have to step up to the plate and move the precious metals higher, not with talk, but with action. Believe me I will have no problem shifting from a bear stance to a bullish stance if the charts shows that is the case. For right now it’s up to the bulls to show the way. I will be watching their every move to see if they really have what it takes to move the precious metals up. This should get everyone up to speed on gold. All the best…Rambus
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“Give a Man a Chart and he may eat for a day
Teach a Man to Chart and he will never starve”
I just want to show you another reason for the big move down on the HUI today. Alot of goldbugs have been watching the bottom rail of the major uptrend channel that goes back to the beginning of the bull market in 2001. As you can see on the bar chart below, today the price action its breaking that all important bottom trendline. I suspect there are a lot of sell/stops just below that area getting taken out right now.
Below is a daily line chart that I have shown you several times already that told me several months ago the bottom rail of the uptrend channel was already broken but most chartists don’t look at line charts. The green circles shows us the similar setup to the 2008 H&S top, with the uptrend rail at the time, intersecting at the neckline. You can see we had the same setup at the beginning of this year. We could see a backtest at some point but no guarantee. Charting is about finding clues that add up to show the big picture and trend so one knows what side of the stock to trade.
The Following Is a List of Unsolicited Comments from Analysts , Newsletter Writers and Rambus Chartology Members
PS…Rambus is unaware of these for the most part (until now)
I expect even Mrs Rambus will not be able to shrink his head now
A bunch of weak people, even in numbers, aren’t strong. Get a whole bunch of confused people together and see how much clarity comes out of it. In other words, you just can’t add one more confused person to the pot, and expect to get any more clarity… One—standing outside of the confused group—who is clear, is more powerful than a million who are confused.
— Abraham Hicks
Although we have never met in person, I’m so proud of what you do and provide to many people like me. Please thank Sir Rambus also. You both are incredible, selfless people.
I don’t read the forum much, but today I did and noticed people were picking on decay of triple etf’s. Your reply on the forum was priceless. Yes, they might decay, but the gains are epic! This is from one of the first Rambus Subscribers.
You Both are the Best!
The Anderson Family
Hi Gary (Fully),
Saw Rambus mentioned about a month ago by a poster on a message board, but I was too busy with tax season to look into it. After watching my pm portfolio get decimated this last month, I saw his name mentioned again a few days ago and signed up for the 5 day trial to read his writings. Even though I do not have a chartist background, Rambus’ writings are easily understood as are his actionable. Maybe it is because we are both Arkies. *:) happy
Now I need to determine how to start changing over my portfolio from heavily long pms.
#1…JOSEPH RUSSO (Elliot Wave International) :
#2…JEFF KERN (Skigoldstocks.com) :
I developed and write about the SKI indices for the gold stocks and gold. Your site has probably registered a lot of recent interaction from my website (www.skigoldstocks.com) because some of the SKI forum members have linked your public articles regarding gold and the mining stocks.
I’ve been focusing on the gold stocks since 1983 and have have read a multitude of analysts/chartists. Your analyses have earned my rather rare respect. SKI’s indices are truly unique, but your analysis is so much more widespread to a variety of markets. My public articles started on Kitco on 1/02/2000 and then have continued on www.321gold.com (http://www.321gold.com/editorials/kern/current.html).
I don’t accept advertising on my website and it seems that you follow the same policy, but I would appreciate it if you would provide a link to my website.
Regards, Jeff Kern
#3…JORDAN-ROY BYRNE (The Daily Gold)
I respect Rambus because he makes insights that others don’t find and he’s not a dangerous permabull like many are but he’s also a bit overzealous with pattern identification.
#4…DAN NORCINI (Professional PM Trader and Blogger)
(Regarding Charts from Rambus)
Thanks Gary – it is good work.
Sincere best wishes,
I continue to be very impressed with the amazing analysis Rambus does
with the charts. Yesterday afternoon’s post about EXK and FNV was
particularly impressive. He’s by far the best chartist I’ve come across
and I’ve been doing this for a while. Many thanks for the work he does
and for his willingness to share it with us at an affordable price. And
thanks to you for running the site and taking care of correspondence
(and probably lots of other stuff too!) My hat’s off to you both!
Thanks for the reply–this Kern guy most be very smart in that he is impressed with Rambus and his TA–
Yours is the only site that subscribe to–I’ve tried them all over the years and wish I had just stuck with yours–
I just find his analysis amazing but more important pretty darn accurate–
Just recently I referred over a few friend and they both think the same as I do–
They are really impressed and wonder how in the hell did I hear about this guy Rambus .
He is the best kept secret on the internet–
As far as I’m concerned you should be charging more—
Anyway great stuff he is doing—how he does it is beyond me–He is #1 in charting and TA not only with the metals but with all the markets .
as you can see can’t stand him–lol
Rambus is a genius –that’s all I can say–the best
#6…SILENTMAN (Goldtent Poster)
I’m a lurker and seldom post but follow this site with rabid interest if not rabid opinions. Within the past year I’ve become a Rambus subscriber and follow his charts with interest. Damn me, but I also regularly read Martin Armstrong’s blog. As a chartist, it’s my opinion that Rambus is very useful, but he does not predict; he guesses; there are breakouts and back tests then new breakouts. He does not predict how the market will behave at these targets. He watches the markets with his charts to see how they behave at key junctures. And then he suggests probabilities based on previous market behavior. To me this is useful information.
wow that was fast! thanx 4 your help i’ve subscribed 2 many newsletters over the years rambus chartology is ‘head and shoulders’ above the rest
and i c the accounting department is also………….:)
have a good night! ,………..waynew
#8…BILL (NUGTKILLA) (Member)
RAMBUS has just TOTALLY elevated my game (and he makes it fun man)
Again, you guys are seriously a GOD send (to me)-I have learned more in less than two months with KING RAMBUS than ever before with all other services combined..?
…..Seriously, you guys should get a medal (GOLD of course) for “keepin’ it real” and Thank GOD for your service.
PEACE guys and pass this along to THE MAN
…..Excellent work RAMBUS-I am often caught in the “analysis paralysis” conundrum-great job
April 15, 2013 at 6:28 am / NUGTKILLA7 /
GLD PUTS, BAM
SLV PUTS BAM
BAM BAM BAM
I came across your site from an email from a free email from Peter Grandich. I read quite a bit on your site and liked the teaching along with the interpretation. Please, always put the cookies on the bottom shelf for us and teach away!”
#10…BILL MURPHY (Lemetropole Cafe)
Regarding the Rambus Post
Very Good …will put this in MIDAS
I occasionally read the postings on gold-eagle.com and a couple of days ago read the Rambus posting. I’ve been reading these gold-eagle postings for years, but on reading Rambus I felt I need to join. And the price is reasonable, so glad I did. Wish it would have been a few months ago, I can’t complain since my portfolio is up 24% since Thursday (I have a lot of options in IAG, GLD, GDX, and GDXJ. Wish I would have known about those U etf’s (USIL, UNGT, etc.). Just read about them on a Rambus posting last night.
Fully, I want to thank you for your replying when I wondered where Rambus was. Now I know he must have been commuing with the charting gods. Due to paying attention to his charting my accounts are screaming higher. I’m also learning a lot about trading what I see, not what I feel or think.
#13…ONTHEBEACH (Goldtent Member)
-> Posted by onthebeach @ 1:01 am on September 6, 2012 :: Edit post
Loved getting the photo of Rambus. Very handsome gentleman with loving eyes full of life love and wisdom. Thank you Rambus for all you do and I’m heartened to have a photo of you
“Getting ready to get volatile”–wow! right call again…”
We salute you Sir Rambus!
Thanks for your hard work and have a much deserved restful weekend.
As a “die hard” gold bug; Sir Rambus saved me from myself last fall. I shall be forever grateful. His thesis is “fundamentals are baked into the charts”. Emphasizes trends, channels, triangular formations, and historical perspective. Excellent commentary and analysis. Combine his perspective/analysis with proficient day trading skills–all I can say is “BOOYAH”!
Just signed up tonight–used to be a member but long story short I’m back because with out a doubt you are the best in my opinion .
#16 JL (New ) Member
I saw your post on Market Oracle. I read a lot of their posts, and some are better than others.
I really liked your post on rising wedges – but I especially liked that you seem unattached emotionally to the instruments that you follow. It seems that others are not so unemotional, and that negatively affects their interpretations.
I was looking through the site after I signed up today, and I cant see any recent interpretations of S&P or Crude – both of which I like to follow.
Can you point me to your current tale on these? Both seem ripe for some big upcoming moves.
#17 JOHN (MEMBER)
Rambus and his work is really incredible and if i haven’t read all i have now seen, especially after today, how truly gifted this man is i wouldn’t believe it. Rambus is the best i’ve seen, for what that’s worth
Rambus, if you read this, you once said recently that you don’t know why when some people have a winning position, they look to sell. they can’t just sit tight. i can tell you why i do. because i’m so used to sitting and losing, having held gold stocks for “the mania freakin phase”. when i traded months back, like now, i just feel the need to rip that cash right off the table before it’s taken away. that’s the only time, other than buying physical, that i’ve done well.
i’ve been chartolified by the king of chartology. i’ve made every excuse, begged and pleaded that what rambus says isn’t true about the pm’s. i lose.
18 NUGTKILLA (Avid MEMBER)
Team RAMBUS-Great plays, SLICK service and you are a PHENOM IMO….
April 5, 2013 at 4:22 pm
Win, lose or draw-one has to admit that you elevate everyone’s game-keep up the great work guys You ARE (beyond a shadow of a doubt) the best darn bang for the buck-anywhere!
19 Anonymous Poster on Yahoo Board
RAMBUS Chartology-google it-become a member-He called ALL of this-ALL OF IT and he walks you through EVERY trade…
20 E W (via email)
I enjoy your professional chart analysis very much which I have read on Goldseek.com. I have used charts and technical analysis almost exclusively since 1990. The price action tells me everything I need to know. I also read your comment about bullish rising wedge and know this by another name as rising scallops. Rising and falling scallops are great indicators for predicting price action.
I truly enjoyed reading you article on Goldseek.com.
The Rambus 1390 gold call looks spot on! What kind of food and water does he have in Arkansas?
I have not been happy the last 3 months with PM’s and it has upset me that my favorite chartist has seen only red. However, if the last 2 days are the end of this hellish experience I suppose I can limp along.
Regardless, I am certainly happy to have been an early subscriber to this extremely talented and unwavering chartist!
Please pass this on!
B M (uni-gold)
22…..Dr. Im (email)
(Apocalypse Now ? ) Great work. Eye opening. If a picture’s worth a thousand words as the old saying goes …
what is Rambus Chartology worth I wonder. Thanx.
23…..BLU (New Member)
came across your site on SeekingAlpha. You were mentioned on
a comment to an article on gold. I did some research and liked your
charting skills and analytical take on the stocks. I will consider joining
at the annual level if all goes well. I’m looking to get familiar with your
site and your analysis.
24 Mestro (Member in Waiting)
Are you still offering a 5 day free trial of your service? I am interested in your opinion of current crude oil prices. It appears that your skill level in reading the markets is unmatched.
I never thought the gold market could be more dangerous than the Federal Reserve. Thank you for your assistance.
25 SIMON (Member in Waiting)
I must say I’m very impressed with Rambus’s output, both the quality (which I was already aware of) but now the quantity. Does the guy ever sleep?
26…JAKEB ( MEMBER)
I have been following you since November and I must say I’m impressed by your skill. As an “old timer” I have paid “tribute to the so called best” thru the years until I realized a flip of the coin was just as good and a lot cheaper than paying for their advice. Since then I have been able to learn enough to become very comfortable in my old age. I do this now for fun and hopefully profit. I hope to learn some new skills following your lead.
My point is that charts are a reflection of our emotions and attitudes. As such they can and I believe are manipulated to a degree in the short term when it serves a purpose. I feel your approach to charting has in a sense unveiled some of the deceit designed to harm us and I thank you for your efforts. I was aided by your abrupt turn in gold as I lightened up on positions. I will be watching closely as I think at some point you will declare the “gold bull” is resuming as I know it will.
I apologize for deviating from the business at hand but I did want to thank you.
Thank you for the welcome. Yes, I discovered Rambus from reading his contributions at the goldseek.com site. I’m really looking forward to learning to become a more “serious” investor. There are many things that don’t make sense to me in the “markets”- especially what’s happened in the precious metals area.
I’m very excited about choosing your service.
28….Sir David (Neophyte member)
I am in awe at the charts and brilliance, but as I am new to the round table, I often do not understand some of the terms and am unsure whether you mean the HUI is going up or down or gold is moving up or down. I am maybe the only simpleton in the court but definitely need an occasional line of explanation.
Thank you for the excellent update last night Sir Rambus…
Just in time for the “ride of a lifetime
As a “diehard goldbug” Sir Rambus saved me from myself last fall–I shall be forever grateful.
Great Post Sir Rambus
May 15, 2013 at 9:44 am / David Kanani / 0 Comments
Great post on physical gold and silver which is my main interest.
You have slain the dragon of ignorance.
Helps explain alot in simple terms.
I remain your humble and obedient investor
31…JM (New Subscriber)
Hello Fully, I was at TFMetals report and somebody posted a link to your weekly letter………I took a look at it and liked the approach to reading the charts………I have been looking for a technician who is not biased towards gold,silver and the miners………..just analyzing what the charts are telling us, not what we want to hear……………Jeff.
Last Word goes to Rambus
January 27, 2012
“Today were going to look at the HUI from top to bottom. Its been a long two year drought for most of the precious metals stocks. When silver had it’s near parabolic move higher last year the stocks barely budged and even declined in many case. Same thing when gold had it’s big move later in the year. The frustration felt by the precious metals stock investors was beyond frustration. How could gold and silver have such big moves and the underlying stocks actually go negative. All I can say its the nature of the markets to make life as difficult as possible, to wear one out with frustration, and then when the investor finally can’t take it anymore he quits in disgust blaming everybody and everything for his failure. Remember we are competing against the best and brightest investors around the world who want your money. This is a game where only the strongest and smartest survive. So keep those thoughts in mind the next time you put your hard earned capital in markets. If it was easy everybody would be millionaires and we know that can’t happen no matter how smart we think we might be.”
Rambus Chartology is gathering a nice following from 26 countries and counting…fun to watch it grow
Compiled by Fullgoldcrown (Gold Permabull turned Darth Trader)
In today’s Chartology Report I would like to clear up a misconception about rising wedges and flags. I have gotten more negative e mails from folks that assure me there is no such thing as a bullish rising wedge or flag. I’m repeatedly told to go back to charting school to learn my lesson. These type patterns are missed by 95% of chartists because they supposedly don’t exist and if they do exist they can’t be trusted. Keeping an open mind in the stock markets is the first lesson to learn. That means anything is possible regardless of what is taught by the so called experts. I’ve been following these two types of patterns for many years and find that are just as reliable as any another consolidation or reversal pattern.
A bullish rising wedge or flag forms in an uptrend. Instead of pointing down into the uptrend these type of patterns point up into the uptrend. A typical consolidation pattern, like a bullish falling wedge or flag, points down in an uptrend which everybody sees and is accepted as the norm.
I have found out through many years of following these bullish or bearish wedges or flags that they tend to show up in fast moving markets. When a stock is in a strong move up you can see series of these patterns that from one after another until a top is reached. The opposite is true in a downtrend where you can have a series of bearish falling wedges or flags form. They are also like any other consolidation pattern that generally shows up as a halfway pattern.
Lets look at a few charts that shows a very bullish move up that is made of several bullish rising wedges or flags. PCLN is a perfect example of what I’ve described above. Note the inverse H&S bottom that formed at the end of 2011 at roughly 450 or so. Note the three red bullish rising patterns that made up that impulse leg to the double top at 775 area. The move was so strong that the bulls never let the correction take on the shape of a normal consolidation pattern that forms pointing down in to the uptrend or a sideways type pattern such as a triangle or rectangle.
APPL had a strong move up off of the 2009 crash low that went parabolic starting at the end of 2011. Before it went parabolic there were three small consolidation patterns that formed. The first one was a bullish rising wedge that is slopping up into the uptrend. The second little red consolidation pattern was your more ” normal” consolidation pattern that was a bull flag that pointed down into the uptrend channel which most chartists would have recognized. The third little red consolidation pattern took on the shape of a six point bullish expanding rising wedge that is pointing up into the uptrend. The last reversal point in this pattern started the parabolic move to the top at 700 or so.
Lets look at one more example of how these small bullish rising patterns work in a strong uptrends. Back in 2005 the SSEC formed a nice inverse H&S bottom that launched the parabolic run China had over the next year and a half or so. Again you can see the two lower red consolidation pattens that formed were pointing up into the uptrend. This is a sign of a strong market. At the time I made a comment after the H&S top formed that something wasn’t right because China, which was the strongest market in the world, was topping out. Note how the parabolic uptrend collapsed once the uptrend reversed down. This is generally how parabolic moves end. Even after almost five years the SSEC has been dead in the water unable to make new highs.
I just want to take a minute and show you another parabolic spike that crashed and burned in oil back in 2008. It actually went down faster than it went up.
Next I would like to show you a six point bullish rising flag that formed back in 1999 on the COMPQ. If one would have know that these type of patterns existed he could have gotten out at almost the exact top just before the crash took place in the tech stocks. As with alot of consolidation patterns they tend to form at a halfway point in a rally. The chart below shows how I measured this bullish rising flag as a halfway pattern. The two red rectangles are exactly the same size that measures price and time.
This next chart for the COMPQ is a long term chart that shows the bullish rising flag that formed back in 1999, same pattern that is on the chart above. If you look to the right hand side of the chart you can see there is a potential red bullish rising wedge that is knocking on the door of the top rail.
Just so you don’t think that these bullish rising wedges, I’ve shown you on the charts above are a fluke, lets look at a beautiful bullish rising flag that formed between 2004 to 2007 on the Dow Jones. The red arrows measures the bullish rising flag as a halfway pattern to the infamous 2007 H&S top that led to one of the biggest declines in US stock market history. Again knowing what to look for would have given you a big heads up that the move was going to exhaust itself once the price objective was met. Before we leave this chart I would like to show you another bullish rising wedge this is now just breaking out on the right hand side of the chart. A backtest to the top rail, at 13,900 could happen at anytime if there is a backtest. I always like to see a backtest to confirm a chart pattern. It doesn’t happen all the time but when it does its a nice confirmation.
The NIKK formed a bearish falling flag or channel halfway pattern after completing its own parabolic rally back in the 1980′s as measured by the blue arrows.
Gold has produced two bullish rising wedges so far during its bull market. You can see the first one was a blue bullish rising wedge that formed back in 2004 to 2006 time frame. The second one formed in 2010. Again you can see that gold has been in a strong bull market, up until the last couple of years, which is one reason we see two bullish rising wedges that point up into the uptrend.
Silver produced two beautiful bullish rising patterns during its parabolic move to 50. The blue bullish rising wedge formed in 2010 that launched the first leg up of the parabolic rise. You can see the red bullish rising flag that formed as a halfway pattern that led to the second impulse leg up. Again knowing that these type of patterns form at roughly the halfway point gives one a clear heads up on where to look for a top or the start of another consolidation pattern.
AMZN formed a bullish rising flag back in 2009 that was the right shoulder of a H&S consolidation pattern. It could be forming another bullish rising wedge, at present. Time will tell.
Lets look at a couple of current bullish rising wedges that are forming in the banking sectors. The first chart is the KRE which is a Regional Banking etf. It broke out of its bullish rising wedge three weeks ago.
The XLF is another bank etf that broke out of its bullish rising wedge three months ago.
The US dollar made a near perfect bullish rising wedge back in the late 90′s that measured out almost perfect as a halfway pattern. As you can see once the price objective was met the dollar formed a H&S top that reversed the uptrend and started the 13 year bear market.
Lets look at a chart that has several downwards slopping chart patterns that has shown us how weak the HUI has been since the high made back in October of last year. You can see the first pattern is a five point bearish falling wedge that was a reversal pattern. The price action then went on to form a slightly expanding bearish falling flag that has four reversal points. I know everyone is wanting to be the first one to call the bottom in the precious metals stocks but its been a losing battle since the October high. Chartology 101 shows a series of lower highs and lower lows all the way down. To call a bottom has been like trying to catch a falling knife. Alot of hands have been cut trying to call the bottom.
The next chart I would like to show you is a perfect bearish falling wedge that formed on the HUI back in the 2008 crash. Keep in mind these types of patterns show up in fast moving markets. I’ve labeled the four reversal points with red numbers. What cemented the bearish falling wedge was when the price action backtested the bottom blue rail. You can also see how the bearish falling wedge shows up almost exactly in the middle of the downtrend as measured from the breakout of the big H&S top.
Deja Vu ?
All the charts above are created from the old school of charting that seems to be a dying art with all the technical indicators out there right now. I still believe there is no better way to analyzing a chart than to watch the price action above all other indicators. There is a place for some if the indicators but sometimes you can get conflicting signals by watching too many indicators. That can cause paralysis just when you need to to make a move. I hope I’ve been able to show you that these patterns are legitimate and have a spot in everyone’s book of chart patterns. All the best…Rambus
Rambus Chartology is a Precious Metals Based Technical Analysis Site with a Twist
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Lets take a look at SLW that is an important stock within the precious metals universe. It had a big bounce up this morning based on some news that it was going to pay out a dividend. If one didn’t have a chart to look at one would have thought that this stock was breaking out by its early morning rise. But that was not the case as the daily chart below shows. All it did was trade back up to the top of its small trading range its been in for a month or so. This little red rectangle is forming just below the 10 point expanding flat top triangle which suggests the move will be to the downside once the small red pattern is complete.
The weekly chart shows a picture of weakness. Last summer this is one of the stocks we bought for the Model Portfolio as it had a beautiful 6 point bull flag. There were alot of other PM stocks that had these type of big looking consolidation patterns that showed there was a potential for a big rally. In hindsight now we can see all those big blue consolidation patterns, that I was showing you last summer, turned out to be topping patterns with a completely different outcome. When you see these type of patterns start to break down instead of up it rings a loud bell that something isn’t right and to pay close attention. As you can see on the chart below SLW did break out of the 6 point bull flag but failed to rally much. As long as it stayed above the top blue rail it still had a chance to rally. After many weeks of failing to make a new high, after the breakout, the price action continued to drift lower. The red circle shows the 2008 uptrend rail and the top blue rail of the 6 point bull flag. As you can see the price action has now broken below both important trendlines. Right now SLW in trying to backtest the blue rail form below after finding some support on the S&R rail. The first thing SLW needs to do to turn positive is to trade above the blue trendline. Right now it’s trapped between a rock and a hard spot.