Several weeks ago we looked at some resistance points for gold and silver from the short  to the longer term time perspective. Below is a daily chart for gold which starts with the 2018 five point rectangle reversal pattern which broke down in May. The backtest to the underside of the five point rectangle took about five weeks to complete, forming a bearish rising wedge. From that point the impulse move down began in earnest stopping in mid July to form a small rectangle. After trading sideways for about three weeks gold broke down from that small rectangle and finally bottomed in mid August where it began a countertrend rally.

The countertrend rally stopped at the bottom of the small July rectangle where support turned into resistance as shown by the black dashed S&R line at 1215 which is our first line in the sand. There is also the top rail of the expanding downtrend channel and the 50 day sma which are also offering resistance.

In order to find the next important area of overhead resistance we need to look at a long term weekly chart going back 15 years which shows the possible massive H&S top. The backtest to the neckline comes into play around the 1235 area and if the backtest fails to hold resistance then the last important line in the sand is the bottom rail of the 2016 triangle which is around the 1265 area. As we’ve discussed so many times in the past, it’s now up to the bulls to show us they mean business by first taking out the 1215 area followed by the 1235 area with the last important line in the sand at 1265.

This last chart for gold shows the 2011 parallel  bear market downtrend channel with the 65 week ema at 1265 that does a good job of holding support during a bull market and resistance during a bear market impulse move.

Just like gold, silver also built out a 2016 triangle and backtested the bottom rail this week at 15 which marks our first area of overhead resistance. As you can see on this long term monthly chart, silver like gold, also has a massive H&S top in place along with its 2011 bear market downtrend channel.

This last chart for silver is a 50 year look which shows its massive 25 year double H&S bottom along with its 2011 bear market downtrend channel and its 2016 triangle. Note the blue triangle that formed way back in 1974 which separated the first impulse leg up from the second leg.

As the charts above show there is some near term resistance at 1215 for gold and 15 for silver which are basically being tested right now. Patience is the key going forward until they either begin their next impulse leg down or breakout above overhead resistance. Have a great weekend and all the best…Rambus

Sometimes a stock can push you just far enough to make you doubt the validity of your analysis just at the most opportune time. Such has been the case for the US dollar where all the evidence strongly suggests it’s in a bull market. I’m not going to go into a lot of detail right here, but I want to show you a couple of charts for the XEU and the XJY that still suggest they’re weak compared to the US dollar.

This first chart is a daily bar chart for the XEU which shows the possible H&S top building out. The last time we looked at this chart the price action was building out the right shoulder with the neckline symmetry line showing the height of the right shoulder. As you can see the XEU traded slightly higher than the neckline symmetry line which for a few days looked like the possible H&S top maybe failing. Note the gap above the neckline symmetry line and now the gap below the neckline symmetry line which shows an island reversal above the neckline symmetry line, see sidebar for more clarity. The year plus H&S top is still in play IMHO.

Next is a longer term daily line chart we looked at that shows how symmetrical the left and right shoulders are as shown by the black rectangle that measures time and price. This potential H&S top won’t be complete until support is taken out around the 112 area where the neckline and the top rail extension line come into play.

Below is the weekly look for perspective.

The XJY on the other hand has been straight forward in its impulse move to the downside after competing the backtest to the year and a half bearish rising flag formation. As you can see the price action is now trading slightly below the initial breakout low just before the backtest took place.

Below is a little more detailed look at the XJY chart from above which shows the backtest to the bottom rail formed a bearish rising wedge on this daily bar chart with the 200 day moving averaging helping with resistance.

The XJY has actually formed one of the biggest consolidation patterns of all the important currencies that makeup the US dollar.  While many of the currencies started to build out their consolidation patterns starting at the beginning of 2016 the XJY started to build out its consolidation pattern in the middle of 2015 creating a three year symmetrical triangle. The bearish rising flag we just looked at on the daily chart above is just a part of the bigger three year triangle consolidation pattern with its bottom rail broken simultaneously with the bottom rail of the three year triangle.

Looking at the different currencies that make up the US dollar gives you a more accurate picture for what direction the US dollar is likely to move especially in the intermediate to long term.

Tonight I would like to update some of the PM charts we’ve been following to see how they’ve been progressing starting with the massive ten year H&S top on gold. Since the price action broke below the neckline several weeks ago it’s a week to week observation  to see how the backtest is playing out. The backtest to the neckline comes in around the 1225 area with this weeks high at 1212.70 so the backtest held for another week. What we need to see next for the current move lower to continue is to see a new weekly close below the previous weekly low.

Below is a weekly bar chart for gold that goes all the way back to the beginning of the bull market in 2000.

Next is the 50 year chart for gold which puts the ten year H&S top in perspecitive.

This next chart for gold is the weekly line chart which shows its 2011 bear market downtrend channel. Our current impulse leg down actually began in April of this year when the price action touched the top rail of the 2011 bear market downtrend channel and the top rail of the 2 1/2 year triangle. Currently the bottom rail of the 2 1/2 year triangle and the 65 week ema intersects at the 1270 area which would be maximum resistance.

Next is a short term daily chart for the GDX which shows the impulse move down from the February bearish rising wedge.

This next chart for the GDX shows three dominate chart patterns starting with the 2016 H&S top reversal pattern, the February bearish rising wedge we just looked at on the daily chart above and the 1 1/2 year triangle consolidation pattern. These three pattern are building out the 2016 downtrend channel we’ve been following. The black arrows show the 1 1/2 triangle as a halfway pattern with the first led down off the 2016 top and our current 2018 impulse leg down moving at the same angle lower so far.

It’s hard to believe its been 8 weeks already since we looked at the breakout below the bottom rail of the year and a half triangle as shown by the red circle which showed a nice clean breakout. In 2015 when the GDX bottomed it built out a double bottom reversal pattern with the double bottom hump at the 16.25 area which might come into play as initial support. The HUI is already testing its 2015 double bottom hump currently.

I wasn’t going to show you this last chart for the GDX because I don’t think the bottom rail of the 2011 bear market will ever be hit but the 2011 bear market downtrend channel is still firmly in place. The bear market began with the perfectly formed massive four year H&S top as shown by the neckline symmetry line. The breakout and backtest to the neckline was short and sweet with the infamous 2013 runaway gap showing up several weeks after the backtest was completed.

Initially we were looking at a possible bullish rising wedge that was forming on the US dollar. That pattern failed when the price action traded back down below the top rail which was disappointing, but there was still a good chance that we would see some type of rising pattern because the initial pattern was a rising wedge. The morphing process is still taking place which now looks like a possible bullish expanding rising wedge building out. Note the small H&S bottom building out at the 4th reversal point which should give the US dollar the energy it needs to at least rally back up to the top of the trading range.

Here is what the possible bullish expanding rising wedge looks like on a longer term daily chart. I know it doesn’t feel like it right now but we know that when a pattern slopes up in the direction of the uptrend it shows a stock to be very strong. If this pattern plays out it’s telling us the US dollar is going to be very strong.

If gold has been trading in a bear market downtrend channel since 2011 then there is a good chance that the US dollar has been trading in a 2011 uptrend channel which this combo chart below shows.

This last chart for tonight is a daily look at the USDU which is a more equally weighted index for the US dollar. The last time we looked at this chart the price action was building out a triangle above the neckline which was completed with a big breakout gap above the original top rail which is the black dashed line with a backtest. It now looks like the triangle is morphing into a bigger bullish rising wedge consolidation pattern. We’ll know more when the USDU trades up to the top rail and how it interacts with it. With most of the other important currencies of the world breaking down from their respective large consolidation patterns it makes perfect sense that the US dollar will have a strong impulse move to the upside. Have a great weekend and all the best…Rambus

Attention Members

Rambus Chartology has had a strong relationship with Catherine Austin Fits for several years. We all met in the Ozarks ad have stayed in contact ever since.

Catherine is editor  a very unique website  The Solari Report.

Catherine and her incredible story are well know to many in the Gold Community :

https://home.solari.com/2nd-quarter-2018-rambus-blockbuster-chartology/