Tonight I would like to update some of the charts on the possible inflection point we looked at about three weeks or so ago. That possible inflection point is still gaining momentum to the downside as the deflationary environment still looks good to go. No market goes straight up or down so one needs to expect some turbulence along the way.

In order for the deflationary theme to play out we will need to see a strong US dollar which will affect the commodities complex and other important currencies of the world. Below is a closeup view for the US dollar that now shows the bullish falling wedge in breakout mode with one backtest to the top rail so far.

The long term daily chart for the US dollar shows its last impulse move that began in the summer of 2014 and ended in March of this year. You can see the smaller red consolidation patterns that formed during that huge impulse move up. The big blue bullish falling wedge I’m looking at as a halfway pattern separating the first  impulse move up from the second impulse move up.

If the US dollar can close the month of November on a strong note and complete a big white candle that would be a very good step in the right direction.

This last chart for the US dollar is another very long term monthly chart that puts the blue bullish falling wedge in perspective as it’s now showing a breakout, something we didn’t have on the first inflection point report.

This next chart is a combo chart that I believe I only showed you once before back in 2014. This combo chart has the $USD:$XJY ratio on top and gold on the bottom. What this chart tells us is that when the US dollar is out performing the $XJY gold is generally weak. As you can see the ratio chart on top is just now hitting a brand new high while gold on the bottom is almost hitting a new low for its bear market on a monthly closing basis. The two red arrows shows where the ratio chart and gold came together in 2011 which was the start of the bear market for gold.

Next lets look at a daily chart for the $XEU which is the biggest component in the US dollar and how the euro goes the US dollar should show an inverse look. If the US dollar is breaking out of a consolidation pattern to the upside then the euro is most likely breaking down from a similar pattern.

The long term monthly chart for the euro shows it breaking down from the blue bear flag that is sitting right on a possible mid line of a big downtrend channel. As you can see there are no touches on the bottom black rail. Many times a channel like this will double if the bottom rail is broken.

There is another long term monthly chart for the euro which shows a totally different topping pattern but is just as valid as the one above. We’ve looked at this massive H&S topping pattern in the past as one of the possibilities for a weak euro and strong US dollar. As you can see the price objective for that massive H&S top is all the way down to the 2001 low around the 82 area.

Lets now focus out attention on a couple of commodities indexes as they have been working their way lower since the last time we looked at them. The daily chart for the $CRB index shows it built out the blue bearish rising wedge complete with a breakout and backtest.

The next chart for the $CRB index is a weekly chart that has some really nice Chartology on it. Recently I just showed you the last couple of years or so but last week I started to look at the history and every time I went back a year all the old annotations came to life. For those folks that like to study measured moves and look at halfway patterns this chart has it all.

This first monthly chart we looked at a month or so ago but nothing positive has happened for the $CRB index. Just the contrary. It has been getting weaker and is building out another black candlestick and is trading at multi year lows.

You may remember this 60 year quarterly chart for the CRB index that is now trading at the low end of the brown shaded support and resistance zone. If the brown shaded S&R zone fails to hold there is little in the way of support until the 1970’s low comes into focus. It’s possible we could see a dramatic fall in this index leading the deflationary scenario.

Another commodities index I follow is the DBC commodities tracking index that has also broken down from a blue bearish rising wedge with clean breakout and backtest.

The monthly chart for the DBC index shows it formed a red rectangle just below the 2008 crash low trendline and is continuing to make new all time lows.

The long term daily chart for another commodities index I follow shows how entrenched it’s in its bear market recently breaking out of the red bearish rising wedge.

Lets look at one last commodities index the $GYX, industrial metals index, which topped out in 2011 along with just about every other commodity and then formed a four and a half bearish falling channel. This week it’s attempting to break below the bottom rail of the red rectangle that is forming just below the bottom rail of the falling channel.

Next lets look at the most important commodity on the planet, oil. Since its big impulse move down from last year the $WTIC has been chopping out a  potential bearish falling wedge, that like the US dollar, I would view as a halfway pattern to the downside. As you can see it’s working on its all important fourth reversal point.

There is another possible consolidation pattern for oil and that is the H&S consolidation pattern. You can see the height for the right shoulder is in line with the neckline symmetry line. The breakout from the blue rising wedge was accompanied by the backtest which may also be the right shoulder for the much smaller H&S pattern that is forming the right shoulder. Oil closed today right on the small neckline. One step at a time. If the small H&S neckline gives way then we’ll look for a test of the much bigger H&S neckline. If either pattern, the bearish falling wedge or H&S consolidation pattern completes, it will have a negative impact for oil.

The long term look at oil shows where the real danger lies. Below is a 20 year daily chart for oil which shows its parabolic rise back in 2007 and its even steeper decline into the 2009 crash low. This chart shows you how the potential bearish falling wedge fits into the big picture as shown on the right hand side of the chart.

This next chart for oil is the history chart which goes all the way back to the early 1980’s. For over 20 years oil traded between ten on the bottom and 40 or so on the top. Then in 2004 oil finally broke out above that 20 year resistance zone and all that pent up energy was released and oil went on a parabolic run to $147. As you can see oil actually came down faster than it went up and found support right where you would have expected it to show up, the top of the 20 year trading range at 40 or so.  Note how the blue falling wedge is forming right on that very important brown shaded S&R zone at 40.

The last chart for oil is the log scale history chart which shows the 20 year lower channel actually doubled in size when the price action broke above the 40 area. It actually was a massive double bottom. You can compare this chart to the long term quarterly chart of the CRB index I showed you earlier.  There is a striking resemblance of what is possible.

I know it’s getting late but there is one more important commodity I need to show you to complete the big picture. Below is a weekly chart for copper which is breaking down from a small red triangle this week. That small red triangle is forming just below a very large neckline which is usually a bearish setup.

The 20 year monthly chart for copper shows a massive H&S topping pattern with the head being the seven point blue triangle reversal pattern. Like oil and the CRB index there really isn’t much in the way of support below the neckline which copper has already broken below and backtested. This is a good area to see some nice reverse symmetry to the downside.

This last chart for tonight is the very long term quarterly chart for copper which shows it formed a 24 year triangle that broke to the upside in 2005 and reached it percentage move at 3.81 or so. At this point the 1.47 area looks like the first place to look for some important support to show up. Note the blue bullish rising wedge that formed right at the top of the big triangle just before it broke out and ran to its all time highs. Is oil’s falling wedge, I showed you earlier, setting up a similar situation but only in reverse.

So the inflection point continues to take hold with most of the important commodities now breaking down out of some very large chart patterns. This also includes the precious metals complex as well. We have the big picture to follow that is so important in understanding what maybe lying just ahead of us. All the best…Rambus

PS: Below is a long term monthly chart for gold which is showing it’s testing a very important neckline symmetry rail right now.

Rambus has always first and foremost focused on Precious Metals and Particularly PM Mining Stocks . When we opened this website in November 2011 Rambus was hoping to help guide PM enthusiasts on a continuing Bull Market run but alas …our timing was BAD . It has been 4 Looong Years and Rambus has been forced to be a Bear pretty much all through this period . He most certainly is NOT at PM Perma Bear as many outside the site think . Its just that we opened Rambus Chartology at the beginning of the most brutal PM Bear Market in History . And it is still very much alive .

Many members continue to be PM Mining Stock Addicted and are dreaming of the day when we finally bottom and can buy their favorite Miners at the most distressed prices in history and ride them up to wild riches in the next PM bull leg . Many have been buying already only to be frustrated again and again. Many are still holding devastated stocks from the glory days .

Now…a ray of hope…Sir Spock at the Chartology Forum has created the Spock Matrix Precious Metals Portfolio . His research has lead him to what he believes are the 25 most worthy PM Stocks to watch based on his Personal experience as a Mining Industry Analyst . Financier  and Player for many years .

The list has just been published at the Chartology Forum .

Only Rambus Chartology Members have access to this work

To see it log in to the Forum and click this link .

http://rambus1forum.com/index.php/2015/11/08/spock-trading-gold-and-silver-miners/

Presently All 25 stocks are on a sell signal based on Spock’s proprietary technical screening process which he has developed over the last 6 months and has been employing with great success (up 27% in 6 months) as applied to his original Spock Trading Universe which he publishes daily at the Forum .

Thank you Sir Spock

All for one and One for all

Fullgoldcrown

Looking at the three month chart for the HUI you can see the internal structure of the blue expanding triangle that is still building out. What’s most important right now is the potential fourth reversal point is playing out as I had hoped it would. The HUI made five attempts to breakout above the top of the trading range around the 140 area but couldn’t succeed. The next area of support will be the neckline or the top rail of the 5 point rectangle reversal pattern at 117.70, red numbers. Expanding patterns are some of the hardest patterns to figure out as the price action becomes more volatile with each swing. So far no backtest to the double top trendline which would be at 129.15. The bottom line is that it’s nice to see a reversal pattern at the fourth reversal point.

An expanding triangle is how a Diamond pattern begins forming. Below is a 2 hour chart which shows the potential Diamond pattern as the possible consolidation pattern. The fourth reversal point now stands out as a double top reversal pattern. Note the smaller reversal patterns that formed within the five month blue triangle consolidation pattern. The price action shows how the HUI broke below the bottom rail of the blue triangle, red circle. The bulls had just enough energy to pop up off the bottom rail one last time backtesting the neckline before finally breaking out with a breakout gap. We got confirmation with the backtest. This price action is called the pop and drop.

The 2 1/2 year daily chart below shows the HUI’s two previous consolidation patterns. Is our possible current fourth reversal point the start of the next impulse move down which will take the HUI down to new bear market lows? This is how they start. Also note the longer term indicators have crossed to the downside, red circles.

The weekly chart for the HUI shows it hit the inside solid top rail of the double downtrend channel this week and reversed sharply to the downside to close the week just a penny of above the low.

The important moving averages for the daily gold chart below shows the red 300 day ma held resistance this week.

The daily chart for gold shows the potential bear flag that maybe forming. After being strongly tested the brown shaded support and resistance zone has held resistance with today’s price action closing on the black dashed down slopping trendline which was the top rail of the old triangle. The first positive would be to see gold close below that old dashed trendline and then break below the bottom rail of the potential bear flag. One step at a time.

Just like the HUI gold hit the top rail of its major parallel downtrend channel this week also. The two small red consolidation patterns strongly suggest the 1180 area is an important area of resistance. Normally the price action will cut cleanly between the two patterns but gold has been a little sloppy in this respect.

The long term weekly chart for gold shows the two potential consolidation patterns that I view as a halfway pattern to the downside. The bottom rail of the sloppy triangle is irrelevant if we use the impulse method, blue arrows, that measures a price objective down to  855. I still haven’t given up on the bearish falling wedge as the halfway pattern. Depending on exactly where gold breaks below the bottom solid rail the breakout to breakout method gives us a price objective down to 845.

Another long term weekly chart for gold shows the reverse symmetry taking place. What happened on the left side of the chart has a direct impact on the right side of the chart as shown by the neckline extension and support and resistance lines. The blue circle shows the previous H&S consolidation pattern with the potential red bear flag forming between reverse symmetry lines #1 an #2.

The very long term monthly chart for gold shows it created an expanding rising wedge as its bull market. The breakout and backtest to the bottom black rail created the right shoulder. The H&S consolidation pattern that formed during the 2008 crash is responsible for the neckline and the height for the left and right shoulder on our current possible massive H&S top. Note how the 2008 H&S neckline extended all the way to the right hand side of the chart, neckline extension rail, is also the neckline of the massive H&S top.

Sir Fullgoldcrown accidentally posted this daily 5 point bearish rising wedge reversal pattern on the main site by mistake a couple of days ago. As this is a reversal pattern the uptrend that has been in place since the August is now over.

I’ve been showing this weekly chart for silver which shows the reverse symmetry H&S patterns on each side of the chart. Silver has been strongly backtesting the neckline on the right hand side of the chart for the last month or so at 15.85. It’s been a tough fight but it looks the bears may now be back in charge as silver closed below the neckline this week.

Just like the HUI and gold, silver also has a parallel downtrend channel. You can see how critical this backtest is to the neckline on the right side of the chart. This is about as low a risk entry point that you can get to short silver at 15.85.

Earlier I showed you gold’s massive H&S top with the 2008 H&S neckline extension rail creating the neckline for gold’s massive H&S top. It shouldn’t be surprising that silver is also showing a similar massive H&S top. Just like gold the height for the massive H&S top’s left and right shoulders is taken from the angle of the neckline, neckline symmetry rail. Have a great weekend. All the best…Rambus

It finally looks like a major inflection point is getting very close to resolving itself in many different areas of the markets. The US dollar is the key driver of this inflection point which is starting to breakout from a nearly eight month bullish falling wedge consolidation pattern. This afternoon the US dollar began a strong rally that is somewhat unusual during the afternoon hours unless it is Fed Day  where anything goes . The daily chart below now shows today’s bar clearly above the top rail of the bullish falling wedge. It’s still possible that we could see a backtest to the top rail at 97.12 before the next impulse move up begins in earnest.

There are some positive developments in regards to the US dollar on the daily chart below. First there are four completed reversal points in the blue bullish falling wedge. This eight month consolidation pattern corrected 38% of the first big impulse leg up as shown by the red arrows. The 20 day ema has just recently crossed above the 50 day ema giving a buy signal. The US dollar is now trading well above its 200 dma which shows the long term nature of this bull market.

The daily line chart for the US dollar shows some nice Chartology which shows the breakout of the top rail of the black triangle consolidation complete with a small backtest. The breakout also took out the neckline extension rail which had been holding resistance.

The weekly chart shows the nice big bullish falling wedge which I’m looking at as a halfway pattern to the upside.

The next chart is a long term combo chart with the US dollar on top and gold on the bottom. The next area of possible resistance could be the 108.60 area which was the high made back in 2002 if the reverse symmetry keeps playing out. Gold has been finding resistance at the S&R line around the 1180 area.

The next long term 30 year monthly chart for the US dollar shows the two fractal bases, big base #1 and big base #2. Big base #1 had enough energy to send the US dollar all the way up to the 120 area before it topped out.

Below is the 40 year chart for the dollar which shows the massive bullish falling wedge which broke out eight months ago. The top rail has held support like a rock during the backtesting process. This is only speculation on my part right now but the price objective of a rising or falling wedge is usually the first reversal point within the wedge itself. Here you can see the first reversal point occurred back in 1985 around the 165 area. Only time will tell us what lies ahead for the US dollar.

Lets look at one last chart for the US dollar which is the monthly candlestick chart. If the dollar can close out the month on a strong note it will have completed its second white candlestick which will help confirm a possible new impulse move is just beginning.

Next lets look at the daily chart for the euro which makes up the biggest chunk of the US dollar. Generally the euro and the US dollar will have similar chart patterns that tend to breakout at the same time. The daily chart below shows the euro breaking down below the bottom rail of the black bear flag in sync with the US dollars breakout of its bullish falling wedge.

The very long term monthly chart below shows how the euro may  play out if the red bear flag works out as a halfway pattern in concert with the US dollar’s bullish falling wedge which I showed you earlier on the charts above. As you can see the euro has been in a confined downtrend channel since 2008. I’ve seen many cases when a confined channel breaks there can be an equal channel that forms below it, in this case. If that were to happen the bottom rail of the lower channel would come at the all time lows made back in 2000 at 82.15 or so as shown by the black rectangles used as measuring sticks.

Below is another long term look at the euro which shows a double H&S top in place with the red bear flag being the right shoulder of neckline #2. This massive H&S top has a price objective down to the 84.90 area which is pretty close to its all time low.

The yen is also an important component of the US dollar. This long term weekly chart shows its massive H&S top we’ve been following very closely since the first red triangle formed inside of the blue bearish falling wedge which created the right shoulder. Since that breakout move from the massive H&S top the yen has been building out the red expanding flat top triangle as its next consolidation pattern.

The weekly chart for the $XSF shows it has formed a H&S consolidation pattern just below the bottom rail of the blue bear flag. As you can see the Swiss Franc has broken below its neckline this week.

The weekly chart for the $CAD shows it to has a massive H&S top and is currently trading below its 2009 low after breaking down from a small H&S consolidation pattern.

Below is another way to look at the $CAD which shows a huge double top. The price action has broken down below the double bottom trendline and has just recently backtested it from below at .78.

This next chart I have not shown in awhile in which I overlaid gold on top of the $XEU. They tend to move together, in general, so if the $XEU is getting ready to move lower then gold should follow along for the ride, in general.

This last chart for the currencies is a weekly line chart I have not shown in some time but it’s now more relevant than ever. This is a comparison chart in which I overlaid gold on top of the US dollar. As you can the US dollar is breaking out from the blue triangle while gold is hitting resistance at the down slopping arrow. For years I’ve been waiting for these two to finally crossover each other similar to what they did in 2006 but only in the opposite direction.

Before I finish the Wednesday Report I would like to show you a couple of commodities indexes that really took it on the chin the last time the US dollar broke out to the upside. The CRB index broke out of a blue bearish rising wedge last Friday and is attempting to backtest the bottom rail from below. This is a critical backtest taking place right here and now.

After breaking down from the black triangle reversal pattern the CRB index has been creating one consolidation pattern below the next. You can see how our current bearish rising wedge fits into the bigger picture. Once the backtesting process is finished I expect to see a similar move between the Diamond consolidation pattern and our current bearish rising wedge.

The further we go out in time the more interesting the price action looks. Below is a monthly chart for the CRB index which shows it has reached its H&S price objective at 205. Keep in mind this is a minimum price objective. Note how the price action is trading below the brown shaded S&R zone. This can’t be good if the US dollar is getting ready to breakout to the upside.

Since I’m running out of time I would like to show you one last chart for the CRB index which I’ve only shown you one time before. Keep in mind when you look at this 60 year chart all the long term currencies charts we looked at above like the euro which shows it has a long ways to fall to reach its price objectives. This is one of those WHAT IF charts. What if the CRB index breaks below the brown shade support and resistance zone? Notice the near vertical move up in the early 1970’s. If the CRB breaks below the brown shaded S&R zone there is not much in the way of support until the all time low is hit under 100 or so. This would be an ideal place to see some reverse symmetry to the downside as show by the red arrows.

These charts above shows you we are really at a very important inflection point that hopefully is getting ready to resolve its self very soon. All the best…Rambus

GDM has finally broken below the unbalanced H&S top or double top. It’s not important what you call the price action above the neckline it’s the neckline itself that is most important with the many touches on it.

I have some free time tonight and the better part of the day tomorrow to post a few charts before I have to catch my flight home on Tuesday. I just want to thank you again for you patience.

Lets take a quick look at the daily INDU chart I posted on Wednesday that now shows the breakout of the rounding top trendline. So far so good.

Below is another daily chart which shows the horizontal support and resistance lines. Currently the 17,600 S&R line may act as short term resistance to allow the INDU to catch its breath before moving higher. As you can see there was a breakout of a small red bullish rising wedge which took out the top rail to the upside last Thursday. That little red bullish rising wedge formed just below the rounding top trendline we looked at on the chart above which is also bullish. Friday’s price action gapped above the 200 dma also. We had a bullish cross of the 20 ema and 50 ema last week as well. There is a lot of positive price action on this chart below.

The weekly chart for the INDU shows the 2009 uptrend channel we looked at when it was testing the bottom rail during the August low. This chart is one of the reasons I’ve remained bullish during this correction, above the bottom trendline is bullish and below is bearish. Outside of the August low this uptrend channel really shows a beautiful bull market.

Another big reason I’ve remained bullish on the stock markets is the monthly chart for the INDU, The Jaws of Life, chart. I know alot of folks have given up on this massive consolidation pattern but until the INDU closes below that very important top trendline, on a monthly closing basis, I have to respect the potential of this consolidation pattern.The top rail was strongly backtested during the August low but it held support again. Depending on what the INDU does this next week it could be one of the biggest monthly gains since the bull market began in 2009.

As you know I’ve been showing you a lot of very long term monthly charts for many individual stocks that are also showing massive consolidation patterns. Below is the $BTK, biotechnology index, which shows you a perfect example of what this pattern looks like. The $BTK built out a massive 9 year flat top or ascending triangle which broke to the upside in late 2009 when everything else was bottoming. The 2009 low, which was the fourth reversal point, hardly shows up on this chart which shows us its relative strong performance vs most of different sectors in the stock markets at that time. The blue arrows measures the price objective using the blue triangle as a halfway pattern. As you can see that price objective has been met at 4356. Since the price objective has been met this tells us the $BTK may now under preform some of the weaker areas of the markets as money rotates into some of the lagging sectors.

Below is a long term quarterly chart that compares the $NDX to the $BTK going back 30 years or so. They both topped out together in 2000 and bottomed together in 2002 which is what you would expect. Now lets focus in on the rally out of the 2009 crash low. This is the point where the biotech stocks really started to outperform the big tech stocks. As you can see the $BTK broke to new all time highs in 2009 while the $NDX was just bouncing off of its bottom. Since that point they both have been in a strong bull market but the big difference is that the $NDX is now just reaching its all time highs. This is an old chart but the red circle now shows the $NDX is trading into new all time highs using a quarterly line chart. Again I expect both of these sectors to rise but this time the $NDX, big cap tech stocks, will out perform the biotech stocks on a relative basis. I believe the bull market will continue higher as capital rotates into the under performing sectors like the semiconductors and networking stocks. Other under performing sectors should also benefit from this move. This is how a bull market lives on. At some point the bull will die but not before most of the different sectors have their own individual bull market.

Looking at a weekly chart for the $NWX, networking index, it’s shows the price action breaking out of a bullish expanding falling wedge last week.

The monthly chart for the $NWX shows a very bullish setup. Note the 2 blue bullish expanding falling wedges that formed on the weekly chart above. What makes the setup so bullish is that one of the bullish expanding falling wedges formed below the massive 12 year H&S bottom neckline and the other is forming above that massive neckline. With that massive base completing we could very well see some reverse symmetry to the upside as shown by the red arrows. Above the neckline at 345 is bullish and below is bearish which marks a great line in the sand.

The long term monthly chart for the $SOX, semiconductor index, shows it broke out of a massive black 10 year bullish falling wedge in late 2010 or so. Note the blue triangle that formed right on the top rail of that 10 year black bullish falling wedge which was a bullish setup. The current support and resistance line comes in at 545 which was the top rail of the blue 5 point triangle reversal pattern that formed between 2004 and 2007. This chart shows some nice Chartology with the different technical formation. The two blue triangles shows a nice clean breakout with an equally clean backtest. Once the $SOX broke above the black dashed S&R line at 545 it has held support twice now. I know many are looking at the current price action as a possible H&S top but the individual stocks that make up this index don’t show a bearish setup.

The long term monthly chart for INTC shows its massive double headed 14 year H&S consolidation pattern. Note the little red bullish expanding falling wedge that has formed right on top of the neckline which is a bullish setup.

I’ve been showing you this monthly chart for Mr. Softy for several years now. It built out a beautiful 12 year blue bullish falling wedge. Note the two small red consolidation patterns that formed one below the top rail and one above the top rail of the bullish falling wedge. Last week MSFT broke out of a blue rectangle consolidation pattern to the upside.

This weekly chart for MSFT shows all the consolidation patterns that have formed since its 2009 crash low including the breakout of the blue rectangle consolidation pattern last week.

I have many more charts to show you in regards to the massive consolidation patterns that have shown up on a lot of the old glory day tech stocks. Is history going to repeat again? Stay tuned. All the best…Rambus

Catherine Austin Fitts of Solari.com is a world class Interview in her own right

See the video below as an example of her present thinking

She was Assistant Housing Minister in the Bush 1 Administration

She has many other interesting credentials ..See the link below as well

Here is the Interview with Rambus

Audio Introduction by Catherine leads in to the written interview

By Personal request this is for Members only

http://solari.com/Library/2015/Q2/rambus.html

…………………………………

Catherine Austin Fits

http://solari.com/about-us/catherine/

https://youtu.be/K73gNKjFx0I

Below is the daily chart for the GDM we’ve been following for sometime now which is showing the potential trading range the GDM has been in since the first reversal point was put in back in late July of this year. Today the GDM spiked above the top rail of the potential rectangle consolidation pattern and has quickly reversed back down inside the rectangle. Today could very well show a false breakout to the upside, red circle, that matches the false breakout to the downside in September bottom red circle. I call these, false symmetry breakouts as they are the same height.

This next daily chart for the GDM shows the top and bottom brown shaded support and resistance zones. Today the GDX hit the top of the upper S&R zone at 455. The 455 line is taken from the low made last November which started the big triangle / H&S consolidation patterns which broke down in June of this year and has led to our most recent area of consolidation which is looking like a rectangle at this point.

This daily chart for the GDM shows the BB bands which the GDM spike above this morning and the fib retrace which so far has held resistance between the 38% and 50% of the last move down as shown by the red arrows.

I’ve shown you this potential ping pong move on the monthly chart for the GDM which is between the 2008 crash low and the previous low around the 455 area. It’s basically caught between support and resistance.

Based on the charts above I’m going to take an initial position in DUST and buy 1500 shares at the market at 14.36 using a closing price above 463 on the GDM chart as my sell/stop. This trade is based on the GDM chart and not the DUST chart.

Lets get right to the charts today as there is so much to cover. Starting with the daily gold chart you can see the blue triangle pattern we’ve been watching now for several weeks or so. Last Thursday gold closed right on the bottom rail which I knew was an inflection point where it could go either way. When I went to bed Thursday night I knew Friday was going to be either a very good day or a very bad day depending on what gold did in the morning. As you can see on the chart below gold dipped slightly below the bottom blue rail and then reversed direction to the upside. That last touch of the bottom blue rail confirmed the 4th reversal point was complete. The rally on Friday is now the beginning of the 5th reversal point which will make the blue triangle a reversal pattern instead of a consolidation pattern if it breaks out above the top blue rail. As I have stated many times an even number of reversal points creates a consolidation pattern and an odd number of reversal point makes a reversal pattern. The fifth reversal point will be completed if the top blue rail gets hit. That will be another inflection point where gold can breakout and continue to rally or reverse back down creating the 6th reversal point. It looks like the 1152 area will be the place to watch as the apex of the much bigger black triangle consolidation pattern and the top rail of the blue triangle come together. If gold breaks out above the top rail of the blue triangle the measured move would be up to the 1201 area as shown by the blue arrows. The bottom line is gold is still chopping around in the blue triangle which is an indecision area where the bulls and the bears are fighting it out for dominance. Keep in mind this is only a battle within the bear market war.

Below is another daily chart that shows if gold does indeed takes out the top rail of the blue triangle, that has a price objective up to the 1200 area, it’s possible that gold may form a bigger bear flag which would still be bearish. Note the brown shaded support and resistance zone that is just overhead between 1160 and 1175 that gold will have to take out to reach the 1200 area. I know there are a lot of folks getting bullish on gold right now. If and that’s a big IF, if gold can rally straight up slicing right through the brown shaded S&R zone and close somewhere in the vicinity of the previous highs made at 1225 that would be showing considerable strength and would be the first step in forming a possible inverse H&S bottom. At this point that is the most unlikely scenario but one to watch.

Below is a 2 1/2 year daily line chart for gold which shows the big picture with the bearish falling wedge with the blue triangle forming right on the bottom black rail. The last pattern that formed inside the big falling wedge was a H&S consolidation pattern that led to the initial breakout of the black falling wedge. Gold has backtested the neckline twice so far from below at the 1155 area which so far has held resistance.

This weekly linear scale chart we’ve been following for a very long time now which shows the parallel downtrend channel gold has been in since topping out four years ago in 2011. For me this is the most important chart to keep a close eye on. I’ve made one slight adjustment on this chart and that is to the bottom rail of the blue two plus year bearish falling wedge.  The reason I’ve done that is because of the two smaller red consolidation patterns that have formed just below the top rail of the black parallel downtrend channel. By making the bottom rail of the 2 plus year consolidation pattern horizontal you can see how the two small red consolidation patterns form one above and our current red triangle is forming just below that important bottom rail of the blue  now six point descending triangle at 1155 or so. I will say it again so please don’t get mad at me. If you see a smaller consolidation pattern form just above, just below, right on top or one on top and one below an important trendline that is usually a bearish setup in this case. If gold was in a bull market it would be a bullish setup. So by making the bottom rail of the large blue falling wedge horizontal we still have 6 reversal points with the bottom rail being a little sloppy which can happen with very large patterns. If you study the area between the two small red consolidation patterns you will see how the high in our current red triangle backtested the bottom blue rail of the flat bottom triangle or descending triangle, at 1175, which is by nature a bearish pattern because of the lower highs at each reversal point. The small red triangle is the same triangle I showed you on the first daily chart for gold. To say this is critical resistance at 1155 or so is an understatement.

Below is a close up look at the four year parallel downtrend for gold which shows the blue flat bottom triangle consolidation pattern as a halfway pattern to the downside as shown by the blue arrows. The price objective still remains the same using the impulse method as shown by the blue arrows. Blue arrows #1 measures the first impulse move down and the blue arrows with the number #2 measures the second impulse move down which is the 2008 crash low at 685. Using the horizontal bottom rail now for the big blue consolidation pattern the breakout to breakout method gives us a higher price objective up to the 828 area. The 65 week moving average now comes in at 1200.

This next chart is a very long term monthly chart for gold which I use the 10 month ema to look for support and resistance. As you can see it did a beautiful job of nailing the bottoms during the bull market years except for the 2008 crash. It has done a pretty good job during our bear market at showing us resistance. There are just two months where the price action closed above the 10 month ema and that was during the formation of the blue triangle consolidation pattern. If you look real close you can see that the highs in August and September touched the 10 month ema and declined. The 10 month ema now comes in at 1160 which is now below the bottom rail of the blue triangle.

Below is a long term weekly log scale chart for gold which shows how the bull market that began in 2000 could still be intact if the big four year bullish expanding falling wedge plays out. The low would be where ever the bottom black rail is hit which right now is around 800 but its dropping so the longer it takes the lower the ultimate price objective. Note the smaller black bullish expanding falling wedge which created the consolidation area for the 2008 crash low. It had six complete reversal points before it was finished developing. Note the breakout and backtest which took roughly 12 weeks to complete before the final leg up to the all time high began in earnest. Also note that a six point red triangle that formed as part of the breaking out and backtesting process on top of the all important top rail of the bullish black expanding falling wedge. Our current small red triangle is forming just below the all important bottom rail of the two plus years  blue flat bottom triangle consolidation pattern. If you look at the first chart of this post you will see a closeup view of the small triangle consolidation pattern that is possibly working on its sixth reversal point if the top rail holds resistance.

Now lets take a look at a daily chart for silver which shows the previous consolidation pattern was a blue four point triangle. So far silver has backtested the bottom blue rail several different times and it maybe getting ready to do it again. A backtest would come in around the 15.75 area. I’ve also been showing this area as a H&S consolidation pattern. The main thing to focus in on is the bottom rail as that is our line in the sand whether it’s a neckline or the bottom rail of a triangle consolidation pattern. I could make a case that the area trading below the bottom rail of the blue triangle could be an inverse H&S bottom. If that is the case then silver will have to break above the bottom rail of the blue triangle. Until that happens, above the bottom rail is positive and below is negative.

The next chart for silver is a daily line chart that shows the blue triangle and the H&S consolidation pattern that has formed just below the bottom rail with a backtest price objective up to 15.75 or so.

Below is a long term weekly chart for silver which shows us it too has a parallel downtrend channel that has formed since it put in its bull market high in April of 2011. This chart I’m showing our latest consolidation pattern as the H&S consolidation pattern that has formed just below the bottom rail of the previous blue triangle. This chart has classic Chartology written all over it. You can see the 2008 crash low ended up being just the head of a big H&S consolidation pattern. Note the little red triangle that formed just below the neckline which led to the vertical move up into its bull market top at 50 or so. The little red expanding triangle, that formed right in the middle of that huge impulse move up, signaled the halfway point which measured up to 50.29.  The big H&S consolidation pattern measured up to 45.57 which gave me a nice target to look for. Compare how much easier the price action was to trade during the bull market compared to our current bear market. The rally out of the 2008 crash low was punctuated by several small consolidation patterns whereas the bear market has consisted of big consolidation patterns that took a long time to show their hand. When I look at this weekly chart it’s very hard to find anything bullish. The very first thing I would need to see is for silver to trade above the neckline at 15.75 and then above the top rail of the downtrend channel. If silver can do that I will have no problem at all being bullish again like I was during the bull market years.

The last chart we’ll look at for silver is the long term monthly look that shows a nice symmetrical H&S top as shown by the neckline symmetry rail. The price objective for that massive H&S top is down to the brown shaded S&R zone at the bottom of the chart. I know it seems impossible but that’s what the Chartology is strongly suggesting. What will be the fundamental reason for that is anybodies guess. We’ll know well after the fact why silver and the rest of the precious metals complex were so weak but right now all I can show you is the charts that are telling us this sector is in very bad shape even after four years of a bear market.

Lets look at one last chart for tonight which will be the weekly look at Platinum. It tends to march to its own drummer but its considered a precious metal along with an industrial metal similar to silver. Like almost all commodities it topped out in 2011 and then formed its first consolidation pattern which is the black three year rectangle. After breaking out of the big black rectangle Platinum formed a smaller blue rectangle just below the bottom rail of the big rectangle. Next Platinum formed a small red triangle just below the bottom rail of the small blue rectangle. Its taken alot of chopping around to gain ground to the downside but as you can see last weeks bar was pretty long as it broke to multi year lows. It appears to be reversing symmetry to the downside. How it went up in the bull market years is how its coming back down in the bear market years.

This is going to be a very interesting week for the precious metals complex as a lot of important areas of resistance are getting close to being tested. How this testing goes will tell us a lot of how strong the PM bulls are at this time. If they’re are for real then they will show us by taking out some of the overhead resistance. Until they can do that I have to respect the bear market that has been in place for well over four years now. All the best…Rambus