Wednesday Report…US Dollar , Back From the Grave ?

We’ll be leaving for home sometime tomorrow afternoon so I won’t be able to do a Wednesday Report. By the movements in the markets, today is actually a better day to do a Wednesday Report.

There are several times a year when the markets gives you an important inflection point.  Today I believe we just witnessed one in regards to the PM complex, the US dollar and the stock markets. Even though the US dollar didn’t have an extremely big up day it did show its hand by breaking out of a downtrend channel while the PM complex had a tougher day breaking down from a small topping pattern we looked at earlier today. Also the stock markets had a very good day to the upside with some completing small double bottoms or falling wedges.

As the US dollar is the key driver going forward lets take a look some charts which are showing it has likely bottomed and is reversing back up. Below is a daily chart which shows the one plus year trading range. We’ve discussed in the past that a false breakout, of an important trendline, can lead to a big move in the opposite direction. Remember the false breakout the HUI and other precious metals stocks had back in January of this year that led to this massive rally we’ve enjoyed up until today? I believe we are seeing the same thing taking place on the US dollar right now. One has to respect the breakout but when the price action trades back above the breakout point the breakout in negated.

This daily chart also shows another reason why I believe the US dollar has bottomed. It just recently broke out above the top rail of its blue downtrend channel and looks like it had a short and sweet backtest. As I explained earlier today on the possible consolidation pattern that maybe forming on the HUI, there has to be four completed reversal points, at a minimum, before we can conclude we have a consolidation pattern. As you can see on the US dollar chart below it has completed three reversal points so far with the possible fourth reversal point just beginning. The fourth reversal point won’t be complete until the price action reaches the top of the trading range, around the 100 area.

us dollar day 1

This next chart puts the one plus year trading range for the US dollar in perspective. There were nine white candlesticks that formed the massive impulse move up when the US dollar finally broke out above the massive bases. We still have a few more days to trade  for the month of May but it looks like the US dollar will most likely form a white candlestick. In and of itself it’s not a big deal when a consolidation pattern is still building out but it is something to keep an eye on. Also when looking at this chart from 35,000 feet, with the big base in place and the current trading range building out, we have to respect the potential outcome when all is said and done. The potential outcome could still be a double top if the price action begins to fail fairly soon but when I look at the massive base it looks like a  consolidation pattern seems like the probable outcome. Keep in mind we could see several more reversal points build out before the possible consolidation pattern is completed.

US DOLLAR HLAFWAY PATTERN

Below is a 35 year chart for the US dollar showing the two fractal bases labeled BIG BASE #1 and BIG BASE #2. Back in the mid to late 1990’s the US dollar built out a big blue bullish rising wedge as a halfway pattern that took roughly three years to complete. That major uptrend finished off with a H&S top which was the beginning of the bull market in the precious metals complex. As you can see our current uptrend channel is less steep than the 1990’s which could take several more years to build out. The big question for me is how well will the PM complex do during this consolidation phase in the US dollar? We will most likely get our answer if or when the US dollar trades back up to the top of its trading range. In the meantime as the US dollar consolidates so should the PM complex as both are reversing direction right now.

us dollar big base 2

This next chart is a weekly combo chart with the US dollar on top and gold on the bottom. As the US dollar has been consolidating sideways gold put in a nice low right on top of the 2008 highs at the 1035 area, brown shaded support and resistance zone. You can see gold’s red rising flag that we’ve been following on the daily chart that has formed above the top rail of the multi year falling wedge. Both the US dollar and gold are at critical inflection points right now.

gold us dollar combo

Below is the daily chart for gold we’ve been following which shows the rising flag that had created five reversal points. The breakout below the bottom rail is the main reason I exited half of the mining shares today. Gold still had a chance to bounce off of the bottom rail to start the possible sixth reversal point to the upside but that was not the case. With five reversal points in place gold now has a five point reversal pattern which is a bearish rising flag. Gold also closed below the 50 day ema for the first time since this impulse move up began.The next possible area of support may show up at the previous high at the 1190 area. The bottom line is we now have a reversal pattern in place which has to be respected regardless of what we may think. With the way the US dollar is looking now, there is a good chance I will exit the reaming shares tomorrow now that the dust has settled and we can see more clearly now.

I’m going to post this part of the Wednesday Report now and will do another post after while on what the stock markets are saying. I know most don’t want to trade the stock markets but while the PM complex is consolidating the stock markets may offer us a good trading opportunity for the time being.

gold day 5 pont bear flag

PS: So many charts to look at tonight I forgot to post this long term chart for the US dollar I haven’t posted in quite awhile. The US dollar is finding support on the top rail of the 30 year bullish falling wedge and the neckline extension rail taken from the previous H&S top. It’s hard to argue with what this chart is suggesting.

us dollar aaaaaaaaaaaa

 

 

 

 

 

HUI Update…

Below is the two hour chart for the HUI which shows the horizontal S&R zone around the 210 area which is being strongly tested this morning. If you look real close you can see a gap below the S&R zone this morning which I didn’t want to see. This is the first time since the bull market began in mid January that the price action is close to trading below a previous low.  The next area of critical support is the 182 to the 187 area.

HUI 2 HOUR

This next chart is a daily look at the HUI which shows two completed consolidation patterns with the third one testing the critical bottom rail of the flag formation. Today’s price action is trading below the 20 day ema with the 50 day simple moving average coming in at the 200 area. I’ve also added the fib retracements which shows the 38% retrace at 183 or so which is the second area of support on the 2 hour chart above.

HUI DAY 1

So far, since this bull market began in mid January of this year, we have yet to see a real consolidation pattern develop of importance form.. This daily chart below shows you where I would expect a consolidation pattern to form  based on the current information we have. In the bigger picture this would be a healthy development and not hurt the bull market in anyway.

In bigger consolidation patterns you will normally see some type of reversal pattern form at the reversal points. Sometimes they are hard to spot in real time but in hindsight they will usually show up pretty clearly. On the daily chart below  I’ve added the possible new trading range or consolidation area with what now looks like a small double top with a breakout and backtest completed. The double top measures out to the 190 area which would be an area to look for  the second reversal point to show up. Based on the lower brown shaded S&R zone, on the two hour chart above, and the fib 38% retrace down to the 183 area, should offer some solid support. For the time being I’m going to call the top in the possible new trading range or consolidation area at 235 and the bottom at 180 or so. What type of consolidation pattern that may build out is still not known yet as the HUI has just started to consolidate the first impulse move up. The consolidation pattern could be a triangle, rectangle, flag or wedge.

Bigger trading ranges like this can be traded if one doesn’t get too greedy. We should see some type of reversal pattern develop at the lower boundaries of the trading range between 180 and 190 or so.

hui trading range

Below is the daily line chart we’ve been following which shows the current S&R line being strongly tested today at the 205 area. If this area gives way then the lower S&R line at the 182 area comes into play which is also the 38% fib retrace of the bull market.

hui 38 % retrace

The weekly chart below shows the three year S&R line going back to April of 2013 which comes into play at the 205 area.

For the time being I’m going to hang on and see what happens if this possible first consolidation pattern begins to build out between 180 and 235. It will be somewhat painful but that is the nature of a consolidation pattern, to inflict as much pain as possible before the next impulse leg up can begin. Some of you who have some decent profits may want to take a few chips off the table and see if you can reenter at a lower price. Normally though it seems like one always pays a higher price up to get back in again.

If this is really the beginning of a bigger consolidation pattern the volatility will be very strong in both directions until the pattern is complete. Also keep in mind in a trading range we’ll have to see a minimum of four reversal points so even if we see a reversal down at the 180 area we’ll have to see another rally followed by one more decline to complete the minimum requirements of a consolidation or continuation pattern.

hui weekly

 

Wednesday Report…Precious Metals : The End of the World ?

Earlier this morning I told Sir Fullgoldcrown that my wife and I were going on a short road trip to Atlanta GA to see her nephew get married this weekend. I also mentioned that when I usually plan something like this the markets always seem to go against me until I get back. At that time the HUI was only down a couple of points. It’s kind of funny that I hardly got the email written and then the plunge in the PM complex. Murhpy’s Law it seems.

Anyway, there are some interesting charts to look at which I haven’t shown you yet, as I was waiting for more price action before I posted them, but tonight seems like as good of time as any to show you a few of them.

This first chart for Gold is one that I have shown you which is the rising flag formation, which has been in place since the first of February. The rising flag has completed four reversal points so far and is working on its fifth, which will be complete when the bottom rail is hit around the 1235 area. At that point gold will have completed five reversal points which would make the rising flag a reversal pattern to the downside. That’s the bearish side of the equation.

The bullish side of the equation, which I’m still leaning towards, would be for gold to find support at the 1235 area, and then reverse direction to the upside, creating a sixth reversal point, building out a bullish rising flag which I would view as a halfway pattern. So far the red 50 day ema has done a good job of holding support during this consolidation phase. The first signs of trouble would be if gold breaks below the 1235 area which would then bring up the old high at 1190 or so.

gold day 1

The weekly chart for gold shows the three year seven point bullish falling wedge with a breakout, and one backtest to the top rail. If we happen to get a second backtest it would come in around the 1190 area where the 55 week ema comes up to join it.

gold weekly 55 week ema

This monthly chart for gold shows the 10 month ema offering support at the 1200 area.

gold monthly 10 ema 1200

As long as the bottom rail of the bull market uptrend channel, which began to form back in 2001 remains unbroken, I will be a bull, and if it breaks then it’s back to the drawing board.

gold bull market uptrend channel

Lets now take a look at a daily chart for silver which is showing a potential H&S top. Near term support comes in at the top rail of the blue bullish rising flag and the 50 day ema at 16.47 or so. It’s not the prettiest H&S top I’ve ever seen, but if it plays out it will have a price objective down to the 15.87 area.

SILVER DAY

This next one year daily chart for silver has a brown shaded support and resistance zone which comes into play between 16.00 and 16.20, which should act as support if it’s reached.

silver day s&r zone

Just over a month ago silver broke two important areas of resistance, the top rail of its bear market downtrend channel, and the neckline of an inverse H&S bottom. A backtest to both trendlines would be at the 16.00 area. Note the big two year H&S consolidation pattern that formed during the 2008 crash low, which led to the parabolic move up to the 50 area.

silver weekly downtrend

This last chart for silver is the long term monthly look which shows its bull market uptrend channel that began to form back in late 2001. The bear market downtrend channel stands out like a sore thumb that transverses between the top and bottom rails in a nice parallel downtrend channel. Silver also formed the blue five point bullish falling wedge reversal pattern at the end of its bear market, which is a good place to see such a pattern.

SILVER MONTHLY

Next lets look at the $XAU which has two different reversal patterns for its bear market low. This first chart is a weekly look, which shows a five point expanding triangle reversal pattern. Some of the long term members may remember the big eight point blue Diamond consolidation pattern that seemed like it would never complete. Then there was the H&S consolidation pattern that formed below the blue Diamond which ended up being the last consolidation pattern in the five year bear market.

XAU WEEKLY

The $XAU also formed another reversal pattern which is a five point bullish falling wedge. Today the price action landed at the top of the big falling wedge, and the top rail of the potential blue bullish rising flag, which comes in around the 82.60 area. From a Chartology perspective this is an important area to keep a close eye on.

xau falling wedge

Next is a weekly chart for the GDX which shows a similar setup to the $XAU chart. It took a lot of work for the GDX to breakout above the brown shaded support and resistance zone, which it’s now in the process of backtesting from the top side. There is also the potential blue bullish rising flag which formed as the backtest to the five point black expanding triangle. The 22.95 area is an important area to watch for support.

gdx weekly 2222222222

Next up is the weekly chart for the GDXJ which also formed a bullish falling wedge as its bear market reversal pattern. The GDXJ formed a six week blue bullish rising wedge which broke out to the topside. The current and possible consolidation pattern is still only on week number four, so a little more backing and filling would be normal at this point.

gdxj weekly

Just like gold and silver the long term chart for the HUI shows it to is in a nice secular bull market uptrend channel. The HUI has been finding some resistance at the apex of the blue triangle around the 230 area. It stands to reason that a rally like the HUI has had since the middle of January of this year, a little backing and filling should be expected, nothing goes straight up forever.

hui mngllll 4444444444

Lets end this Wednesday Report by looking at the Combo 10 chart which is showing some pretty impressive price action by most of the PM complex. Use the red arrow as a reference point, which shows the bottom of the 2014 consolidation area for most of these indexes, with the black arrows showing the top of the consolidation areas. What is so impressive is how most of the PM stock indexes have rallied above their respective red arrows, which would have offered strong resistance during the bear market years. The two strongest of the PM stock indexes still remain the XGD,TO and the GLDX, which have broken above their resistance line as shown by the black arrows. The SILJ has made a strong run up to the top of its 2014 trading range, and is taking a break in the action. Silver still remains the weakest sector within the precious metals complex, as it has still failed to close above it’s 2014 horizontal resistance line, red arrow. Looking at gold and the rest of the PM stock indexes you can see they have rallied strongly into resistance, which is the middle of their 2014 consolidation patterns. That is a lot of overhead supply that has to be eaten through.

Today may have felt like the end of the world for most folks, but from a Chartology perspective, this is normal price action in a new bull market. Two steps forward and one step back should be expected.

As I mentioned in the first paragraph I’m going to be on the road for the next week. I will have my laptop and will post when I get some time.  All the best…Rambus

combo 10

 

 

 

Stock Market Combo Chart…DeFence DeFence DeFence

Below is the daily line combo chart we’ve been follow for quite awhile now which has four of the US stock markets on it. A week or two ago I posted this chart which was showing a possible H&S top forming on the INDU and the SPX. I drew in a horizontal neckline for starters because there wasn’t a right shoulder arm pit yet. I haven’t tweaked the possible necklines yet so you can see how this potential H&S top is building out. Thee QQQ on top shows the red expanding triangle which broke down with the bottom rail getting backtested earlier this week. The RUT is still inter acting with the top rail of the black expanding falling wedge and the bottom rail of the red rising flag that has completed seven reversal points with a false breakout above the top rail.

qqqq day one

Below is the now updated combo chart which is showing the RUT, INDU and the SPX forming a H&S top with all three testing the neckline at the moment. The potential H&S tops all formed above the top rail of their bigger one year black falling patterns which would now show a false breakout. To get bullish again I would have to see the price action trade back above the right shoulder high. Until that happens a defensive posture is warranted.

combo 2 ssssss

PM Complex Combo Chart…

Below is a long term weekly chart we’ve been following which shows the breakouts and backtesting that have been going on for several months with gld and slv, and just 5 weeks or so for the HUI. This big picture look from 35,000 feet shows how infant this new bull market is right now. It was basically born back in January of this year and is just opening its eyes. What we want to see now is a higher high in the coming days and weeks.

PM COMBO CHART

HUI Update…Mental Preparation

When looking for support and resistance many times I will build out a horizontal zone which will generally have several previous highs or lows depending on what direction the move is taking place. For instance, on the HUI two our chart below, the previous small tops that formed in April shows the latest brown shaded S&R zone which comes into play between 208 and 210. There was another brown shaded S&R zone that worked well with the March highs as support. If the 2008 to 210 S&R zone gives way then I’ll be looking at the March S&R zone for critical support. If that one gives way then we’ll know a bigger correction is in order.

hui 2 hour

This next chart for the HUI is a two year daily line chart which shows how the reverse symmetry is building out. The blue circles shows how the price action hit the horizontal support and resistance line and then built out a small consolidation pattern just below it  before the breakout. This is perfect Chartology. This rally off the January low has been very strong and near vertical. The failure of the price action to reach the top brown shaded S&R zone between 245 and 250 suggests it needs a rest which it has been doing by correcting down to the previous S&R line at 208.

I know it’s not fun to be in the markets when the inevitable pull backs take place but that’s part of the game. Having a game plan and an idea of where to look for possible support makes riding the corrections out much easier. When one is in the dark with no idea of where possible support may show up, that’s when emotions will take hold, making you do something you might not want to do. For the time being the new trading range now exists between roughly 200 and 250 where anything can happen in the short term which will be just noise.

hui day line

Below is a shorter term daily bar chart which shows the two brown shaded support and resistance zones. The 50 day ma has now risen up to 188 which should offer some support if needed.

hui bar charty

This next daily line chart for the HUI shows the massive H&S top that led to the five year bear market and the double bottom that ended the bear market. Note how the apex of the blue triangle showed resistance on the initial hit at 235 which then led to the decline to the lower S&R line at 208 or so. This may be a good place to see some ping pong action take place between 235 and 210 which may end up forming some type of consolidation pattern which would be healthy. The 200 day moving average is still pretty low but it has turned up strongly. This chart also gives you a feel for the magnitude of this impulse move up.

hui very long line 44

The weekly chart below shows what I would consider to be the worst case scenario which would be a complete backtest to the top rail of the black expanding downtrend channel and the top rail of the blue expanding triangle reversal pattern at 180 or so. The 180 area would also represent a fib 38% retrace of this first impulse move up. Will the HUI go that low? I don’t know but I’m prepared mentally if it does.

hui weekly worst case

 

 

UUP Update…

Below is the two year daily chart we’ve been following very closely. Last week the price action broke below the bottom rail of the small red bear flag that formed right on top of the brown shaded support and resistance zone. That little red bear flag has given the UUP the energy it needed to break below the S&R zone. Note the gap below the bottom of the S&R zone. The brown shaded S&R zone may also be the double top hump which should now reverse its role to what had been support to now resistance if the double top is going to play out to the downside. It’s still possible we could see a backtest to the underside of the S&R zone between 24.20 and 24.45 that should now act as critical resistance.

The other very important feature of this two year daily chart is the possibility that we could see some reverse symmetry to the downside. Note the eight month impulse move the UUP made from July of 2014 to March of 2015 which was nearly parabolic in nature. Longer term members will remember how we tracked that big impulse move up and how many small consolidation patterns formed a rising wedge or flag which is the sign of a strong move when they slope in the same direction as the trend and not against it. If the PM complex and commodities are going to have a strong rally it will be because the US dollar will be in a strong impulse move down. We now have a very clear line in the sand as shown by the brown shaded S&R zone between 24.20 and 24.45. Above will be negative for the PM complex and below positive.

DOULE TOP HUMP

The weekly line chart shows the double top in place with a breakout and backtest to the double top trendline. A reversal pattern always has an odd number of reversal points so a double top or bottom will have at least three reversal points. This weekly line chart also shows how steep that impulse move up was in 2014 and 2015. This is the kind of setup to see reverse symmetry down over the same area as the rally. As you can see there were only a couple of weeks that were down over that eight month rally so there isn’t much in the way to halt a decline once it gets going.  Again the double top trendline is our line in the sand for the PM complex and commodities in general.

UUP WEEKLY LINE

 

Weekend Report…..The Magic of Gold Ratio Charts

The first point I would like to make is that many of you are probably wondering how I could reverse my long term bearish view on the precious metals complex to a bullish view in such a short period of time. The other point I’ve been trying to make is to get you positioned and sit tight, as this new bull market is just getting started. Understanding the Chartology of this sector from the many different precious metals stock indexes, to individual PM stocks and especially the combo ratio charts, paints a picture that if one keeps an open mind and truly understands what is taking place right now, getting positioned and sitting tight makes alot of sense. This is easier said than done of course.

Many are surprised by the magnitude of this bull market rally in the precious metals complex and are trying to come up with all kinds of reasons why it should or shouldn’t be taking place right now, based on whatever trading discipline they’re using. Most are looking for at least a correction to relieve the overbought conditions before the bull market can make any progress higher. That may very well happen, but I’ve been showing you three very important combo ratio charts which are telling me a different story based on the Chartology and inter market ratios for the PM complex.

I coined the phrase  “Reverse Symmetry” years ago when I first picked up on it after looking at literally thousands of charts and studying their price behavior. Once you become aware of this particular piece of Chartology you begin to look for it and will see it all over the place from short term minute charts to long term monthly charts. It’s no big mystery why it works but it can tell you what to look for during certain market conditions. The precious metal complex is giving us a perfect example of reverse symmetry right now.

I’ve been showing you at least three different combo ratio charts for the PM complex which showed the end of the bear market and the beginning of the new bull market. Keep in mind this is unique to Chartology and my interpretation of the Chartology.  There are many good trading disciplines out there in which some investors can master and be successful while most will give up the minute it doesn’t work perfect. Sticking with whatever trading discipline you choose, whether it’s cycles, Elliott Wave, Gann, or even watching the COT’s numbers, give yourself the time to fully understand and grasp its principals before you give up on it. For me personally, Chartology is the road I chose to travel and after experimenting with several different trading disciplines I always came back to Chartology.

So why I’m I so bullish on the precious metals sector right now?

1…GOLD:XAU Ratio ( When this is rising  ,Gold is stronger than the Gold Stocks and when it is falling Gold Stocks are Stronger than Gold , which is Bullish for Gold)

This first combo ratio chart I’ve been trying to show you about once a week so you can follow the price action. I’ve been showing this combo ratio chart for years, but when I seen the double top put in place at the top of the chart, yellow shaded area, I know what a double top looks like and this double top formed at the end of a 20 year parabolic move where gold had been outperforming the XAU. The break below the double top hump came in January of this year, which was the first real clue that the nearly five year bear market maybe coming to and end, which would usher in a brand new bull market.

I won’t go into detail again as I’ve been covering this chart in depth since the double top reversal pattern completed. When the ratio chart first broke down from the double top I said to look for reverse symmetry to the downside, as the rally leading into the double top was a near vertical move. In just three short months look at how the price action has been declining in a vertical move down, breaking below the parabolic arc and now the brown shaded S&R zone between 15 and 15.75. This is one reason to have gotten positioned and to sit tight. A break below a parabolic arc strongly suggests that the move to follow will be just as strong or stronger to the downside vs the upside. It’s just the nature of a broken parabolic arc.

You can see what is happening to the XAU in the bottom chart as it bottomed at the exact same time as the ratio chart doubled topped. The ratio chart is unwinding its parabolic rise while the XAU is doing the very opposite by rallying in a near vertical move. Folks we don’t get this kind of setup everyday. This is a rare phenomenon that is only being presented by Chartology. I doubt anybody on the planet is looking at the precious metals complex from this particular angle. This combo ratio chart shows you one reason the bear market has ended, and a new bull market has begun. This combo ratio chart also shows you why the vertical move up in the precious metals stocks is taking place and sitting tight is the prudent thing to do right now IMHO. We are dealing with a breakout of a 20 year parabolic uptrend that is reversing direction in favor of the PM stocks, which is a big deal. Getting positioned at a bottom like this in the PM sector or any stock market for that matter doesn’t happen for most investors, it’s only a dream.

aaa gold ratio xau

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2…TLT:GLD Ratio :

TLT is the ETF for US Treasury Bonds and GLD is the ETF that tracks Gold .  When  this ratio is rising Bonds are outperforming Gold , and when falling Gold is outperforming Bonds , which is bullish for Gold .

Now lets look at another combo ratio chart which compares the TLT:GLD on top and GLD on the bottom, which shows the inverse relationship these two have most of the time. Again I won’t go into a lot of detail as we’ve been following this combo ratio chart pretty closely. Just a quick summary shows how the ratio chart on top formed a H&S top during the 2008 crash, while GLD formed a H&S bottom inversely to the TLT:GLD ratio chart. Then when GLD topped out in September of 2011 the TLT:GLD ratio chart shows it bottomed at the same time as shown by the red arrows in 2011.

Looking at the ratio chart on top we can see the one year blue rising wedge that ended up having seven reversal points, which is a reversal pattern that was confirmed with the breakout gap to the downside. Up until the blue rising wedge broke to the downside there was a potential that it could have just been a consolidation pattern if the price action had broken to the upside instead. But we got the breakout gap to the downside which sealed the fate for the bear market in GLD, which then gave rise to the new bull market in GLD.

Note the near perfect inverse correlation between the ratio chart on top and GLD on the bottom during the January 2016 reversal points on both charts. As the ratio chart gapped down out of its blue bearish rising wedge GLD broke out of its bullish five point falling wedge reversal pattern at the same time.

One last bit of interesting price action on the ratio chart which shows the recent top in January of this year matches the same high made back in 2008. That top on the ratio chart in 2008 shows the head of the H&S reversal pattern, which matches the head for GLD on the bottom. That important high on the ratio chart and low on GLD led to GLD embarking on its final move up to its September of 2011 all time highs at 1920 in just three years. Again January of 2016 comes into play as an important low for the precious metals complex based on the ratio chart.

bbb

This next combo ratio chart shows another good example of why I think the bear market is over and a new bull market has begun in the precious metals complex since mid January of 2016. What fascinates me the most about Chartology is how it can show the future price action before the fundamentals come into play. As most of you know the Japanese Yen has been on a rocket ride for the last week or so , faking out just about everyone. We’ll hear stories of manipulation or Bank of Japan or the Fed or other fundamental reasons why it’s doing what it’s doing, which I do not  get into because the Chartology already showed us what was coming. It constantly amazes me the Chartology knows before anybody  what is coming down the pike.

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3…US Dollar: Japanese Yen Ratio:

This ratio rises when the Dollar is rising against the Yen which is bearish for Gold and when it is falling the Yen is rising against the Dollar which is bullish for Gold.

Below is another combo ratio chart which has the $USD:$XJY ratio on top and gold on the bottom. I’ve been showing you this chart for many years but most importantly since the ratio broke down from that blue five point bearish rising flag reversal pattern in January of this year while Gold on the bottom chart was breaking out of its bullish falling wedge reversal pattern at the same time. If you recall back in late January of this year I said there was a good chance we could see some reverse symmetry to the downside in the ratio chart which would be bullish for Gold. I had absolutely no idea why the US dollar would collapse against the Yen but collapse it has.

Again note the parabolic rise the ratio chart made in 2014 to the top in late 2015. The rise was so steep no consolidation patterns formed on the way up so there is nothing to offer any support on the way down until neckline #2 comes into play around the .83 area. As the ratio keeps falling we should see gold rising which has been the case. If we see the ratio chart on top hit neckline #2 at .83 and gold hits the bottom rail of its blue rectangle consolidation pattern that formed on the way down at 1550 or so, it will most likely mark a period of consolidation for both the ratio and gold.

ccccc xjy

These three combo ratio charts above shows me how the bear market ended and how the new bull market began in the precious metals complex. There are never any guarantees when it comes to the markets, but by following the price action one can take out alot of the noise, which can can make things confusing at times.

What I believe is happening since the tops were put into place on these ratio charts above, is that the parabolic move leading into those tops is now reversing symmetry back down over the same area. This is the reason I’ve been so adamant about getting your favorite precious metals stocks bought, and to sit tight until some decent support is hit on these ratio charts. This could be one of the easiest or hardest trades you’ll ever  make. It could be easy because all you have to do is buy your favorite PM stocks and do nothing. The hard part would be if you try to outsmart the new bull market by over trading and finding yourself on the outside looking in.

A correction is coming , but what is going to surprise most folks is the strength of this first impulse leg up. Some are waiting for the right signal to call the new bull market in the PM complex, while many are trying to trade in and out of this strong impulse move which is just almost impossible to do. The move like we’ve seen since mid January of this year is frustrating the bulls and the bears alike. This is a perfect start to the second leg up of the secular bull market that began at the turn of the century. All the best…Rambus

 

 

 

 

 

HUI Update…Beautiful Chartology

Below is a two year daily chart for the HUI which I first showed you when the HUI broke above the double bottom hump to start its bull market. I call this chart the reverse symmetry chart as shown by the red arrows. How a stock comes down, especially in a strong move, will reverse symmetry back up over the same area. It’s more of an art than a science. You can see the rally off of the mid January low found a little resistance at 182 before it broke through. Now it’s testing the next overhead resistance line at the 208 area and has been finding some resistance which we should initial expect. Today is the fourth time that the HUI has tested the 208 area from below. A breakout above the 208 area will put the next area of resistance on the map at 250 or so which would happen fairly quickly as the decline back in 2014 was pretty steep. If the HUI fails to breakout right here at 208 then support will show up at the previous high at 182 or so.

hui