Tonight we’re going to look at the precious metals complex and get focused again as this is the area we need to concentrate our efforts right now IMHO. All the volatility in the stock markets has many taking their eyes off the ball of what may turn out to be the trade of a lifetime for some of you. I’m just as guilty as the next person trying to play the stock markets looking for that big trade that is so elusive right now. The stock markets are like a veg o matic chopping up both the bulls and the bears alike.

I have made a couple of small trades trying to catch one of the swings but the volatility is very hard to deal with. Back in 2000 after the markets topped I began to play the short side as bear markets can be very profitably if you can catch them just right. What I learned back then was you had to be dead on the money with your entry points because the volatility would knock you out before the move you were looking for actually took place. It looks easy in hindsight when you view the long term charts of bear markets but trading them in real time is a whole different ballgame.

I see the same thing happening right now. The volatility is eating investors alive. Just when you think you’re on the right side of the trade we get 500 to a 1000 point reversal. Believe me it doesn’t take to many whipsaws before you become totally confused on what to do. We made some good profits on the initial thrust down which is why I sold out on Monday to lock in our gains. As I stated earlier I’ve made a couple of trades but nothing big because I know what is likely to happen. The markets have a way of taking back all your profits and then some before you finally throw in the towel. And the thing is you’ll be proven right over time but for most investor they’ll keep trying until until they go broke. It’s a game of psychological warfare.

Until this latest stock market move we’ve been really focused on the PM complex and that is where I’m going to concentrate my efforts, for the most part, over the next week or two. Yes there will be some big money to be made in the stock markets but there will also be some big money to be made in the precious metals complex which is giving us a better read on the charts than the stock markets right now. As I have shown you this week the PM complex is beginning to finally break down out of some of those huge 2 1/2 year consolidation patterns unlike the stock markets where the trading action is in the middle of no mans land right now as the big breakout has already occurred.

Before we look at the daily chart for gold I would like to show you the daily chart for GDM which has the last  pattern which was a combo triangle / H&S consolidation pattern that began to form at the November low from last year. The reason I’m showing you this chart first is so you can see the price objectives of these two patterns was met and then the relief rally started with a small double bottom. As you can see the relief rally went almost back up to the 455 area which was the November low from last year and was a place to look for some resistance to show up. The price action came close but fell just shy before heading back down to the bottom where GDM closed today.

This is a critically important low right here. Either the GDM will break down right here and now or we could see another reversal back up which would then give us a consolidation pattern. If this new trading area is going to be a bigger consolidation pattern then we have completed two reversal points so far with the third one beginning at our current low. In other words we need one more counter trend rally to complete a consolidation pattern. Keep the combo triangle / H&S consolidation patterns in your mind when we look at the daily chart for gold.

Now lets look at a daily chart for gold which shows the same two formation the triangle and H&S consolidation patterns which began to form at the November low last year. Unlike the GDM which reached its price objectives gold didn’t even come close to reaching its. As you can see gold had the breakout move and the counter trend rally but the counter trend rally was much stronger than GDM’s. The red circle shows where I was looking for the counter trend rally to end which has two necklines and the bottom rail of the black triangle.  As you can see gold went slightly higher finally finding resistance at the top rail of the black triangle where it has finally started to roll over. On the GDM chart above the price action is trading right at the very bottom of its last low but gold is still trading well above its previous low which is showing the miners are much weaker than gold which is what we want to see right now. This combo chart pattern for gold has two price objectives down toward the 1000 area. Where will the PM stock indexes be if gold reaches the 1000 area?

This next chart for gold is a daily line chart which shows the massive 2 1/2 year bearish falling wedge with the blue triangle / H&S consolidation pattern that formed out toward the apex. This daily line chart shows the counter trend rally stopped dead in its tracks at the neckline and the apex of the blue triangle. At this point I’m calling this counter trend rally just a strong backtest to the bottom rail of the 2 1/2 consolidation pattern until something says differently.

Now lets take a look at a daily line chart for silver as I believe it’s showing us the way lower for the precious metals complex. After breaking out of its blue triangle consolidation pattern about a year ago silver has been chopping out a pretty large H&S consolidation pattern. Today marked a brand new low for its bear market that began in April of 2011. It’ hard to imagine anyone holding on for the better part of four years and then seeing silver hitting a new low today. It has to be very frustrating psychologically and financially.

The weekly candlestick chart for silver shows how its bear market has unfolded since it put in an unbalanced double top to ended its bull market. Note the string of black candlesticks, on the right side bar, that tells us the last move down was an impulse move. If the month of August ends up with a black candle then this will be the first one in silvers brand new impulse move down in which we should see a sting of black candlestick into the low.

This next weekly chart shows how silver is reversing symmetry back down from its big rally off of the 2008 crash low. Strictly from a Chartology perspective it’s hard to find anything bullish on this chart.

The very long term monthly chart for silver shows its double H&S top and the recent breakdown this week of neckline #2. There really isn’t much in the way of support until neckline #1 is reached. I know it’s hard to believe but that’s what the chart is telling us.

Next I would like to show you a couple of long term charts for the $XAU that shows where we may look for a price objective for this next impulse move lower. This first chart shows you the entire history of the XAU which is showing us a massive bearish rising wedge formation. I would like to focus your attention to the bottom rail of the massive rising wedge which shows us one blue triangle consolidation pattern above the bottom rail and one below. I have talked about and shown you many cases of setups like this. You’ve heard me say if you see a consolidation pattern above an important trendline, or below and important trendline, or one right on an important trendline or one above and one below and important trendline, that is usually a very good setup. Here we see one above and one below that very important 15 year bottom trendline. The XAU is now just several points away from making brand new all time lows. Pretty amazing when you think about it. Also note the big reversal patterns that have played such a key role during the formation of this nearly 35 year monthly chart. Big reversal patterns big moves. I got a price objective by measuring the width of the huge bearish rising wedge which shows a price down to the 23.63 area.

Below is a slightly different version of the long term monthly chart for the XAU in which I started the first reversal point at the beginning of the bull market in 2000. Starting the price objective measurement from their we get a parallel rising channel again separated by the two blue triangle consolidation patterns. Again I took the measurement from the width of the rising channel and added it to the breakout point which gives us a price objective down to the 25.00 area.

Next I’m going to show you the price objective for the GDX based on the big bearish falling wedge. On the weekly chart below there are two different price objectives based on the impulse and breakout to breakout methods. Using these to techniques we get a price objective between 7.40 and 7.90. I will use these price objective for our DUST trade.

Next we’ll look at a weekly chart for the GDXJ which shows its entire history complete with its massive H&S top and a slightly different bearish falling wedge. The GDXJ’s bearish falling wedge is made up of six reversal points and has a price objective down to the 6.50 to the 7.50 area.

As it’s getting late I need to get this posted. Keep in mind these price objectives will get us into the ballpark and give us a place to look for an important low. Nothing is 100% guaranteed in the markets but I like this setup we’ve been following for well over a year and probably longer. This could very well be the capitulation phase that drives the last of the die hard gold bugs nuts.  This is why I said in my opening comments that I feel much more comfortable playing this potentially last impulse move down in the PM complex vs trying to catch a move in the stock markets right now. To each his own. All the best…Rambus

Below is the combo chart we’ve been following very closely which shows the HUI and GLD with their respective big consolidation patterns. As you can see they both gapped below the bottom rail of their two plus years consolidation patterns only to have a small selloff. It looked like the initial backtest was going to hold resistance but that wasn’t the case. After the initial backtest they both sold off for a few days only to gap back up and over the bottom black trendline. I have to admit that was very disappointing to me as we’ve been watching this chart for a very long time and everything worked out just like I had hoped it would. We got the big breakout gap on huge volume which is what I was looking for. I’m glad to see the HUI is now trading back below the bottom trendline and GLD is getting closer to breaking back below its bottom rail which will help confirm this latest price action has been just a strong backtest.

The bottom trendlines were a little tricky to put on as the consolidation patterns are so big and the lows and highs are not exactly touching the trendlines. When I see a breakout and backtest I always will update the trendlines, in this case the bottom trendline, which helps shows where the trendline should actually go. If you follow the price action of the bottom rail of each chart pattern you can see how clean the breakout and backtest are now that we have more information to work with. I believe the bottom trendline for the HUI and GLD are properly place. Keep in mind these are very big consolidation patterns that are just breaking out.

Before we look at some weekend charts I just want to second Sir Fullgoldcrown’s Friday night post at the forum. We created Rambus Chartology so we could have a community of like minded investors who want to learn as well as share what they have experienced in their own investment world. We are all equals when it comes to the investment world which can humble even the most experienced traders on the planet. That’s the nature of the game we’re playing. Sharing ideas in which everyone can benefit from is the corner stone of Rambus Chartology. I know we have a lot of lurkers at the forum and if you have any good ideas you would like to share with the rest of the members please feel free to post what you have without fear of ridicule or embarrassment. As Sir Fully likes to say, “It’s all for one and one for all.”

Last week was a week that doesn’t come around very often in the stock markets. After chopping sideways for all of 2015 it now looks like we’re finally getting an intermediate term move down as some important support zones have given way. Until this past week it was still uncertain whether this horizontal trading range was going to be a consolidation pattern or a reversal pattern. Thursday and Friday’s price action confirms for me that we have a 5 point bearish flat bottom expanding triangle reversal pattern in play now. The bottom blue rail of the expanding flat bottom triangle, which gave way on Thursday at 17,100, finally broke critical support. That bottom trendline will now become resistance on any backtest. The next big question will be whether we’ll see a backtest to 17,100 before we go lower? I’ll try to answer that question a little later.

Next lets look at a four year weekly chart for the INDU which shows the smaller red 5 point bearish expanding flat bottom triangle as part of a much bigger blue expanding rising wedge. As you can see the DOW closed right on the bottom rail last Friday which is showing us it’s hot. A break of the bottom blue rail of the expanding rising wedge at 16,460 will give us an even bigger topping pattern.

This next very long term weekly chart for the INDU goes all the way back to the 2007 H&S top which reversed the bull market at that time. That strong decline ended with an inverse H&S bottom which was the exact same height as the 2007 H&S top and led to our 6 1/2 year bull market rally. On this weekly chart I’m showing the bottom rail of the expanding rising wedge as a black dashed support and resistance line. That line is now the most important line on that chart. It will be interesting to see how the price action interacts with it.

This last chart for the INDU is a 30 year monthly chart which shows how the blue expanding rising wedge fits into the big picture at the top of the chart. Keep in mind this pattern won’t be complete until the bottom rail is broken to the downside. That will be the confirmation we’ll need to see that says this stage of the bull market is now over.

Now I would like to show you a few charts that may shed some light on whether we’re going to see some follow through to the downside or if we’ll get a backtest to the 17,100 area before the INDU moves lower. Below is a daily chart for the $RUT which is now showing a double H&S top, not a very pretty one but the pieces of the puzzle are there. Notice the blue bearish falling wedge that formed right on neckline #2. As I’ve stated countless times in the past when we see a smaller consolidation pattern form right on top, below, above and below or right on an important trendline, it’s usually a pretty good indication that the pattern is valid and the breakout will occur. Also I have shown you many times in the past when we see a small consolidation pattern slope in the same direction of the trend, in this case down, we usually see a pretty strong move. This looks like the case with the $RUT.

The long term daily chart for the RUT shows the damage that has occurred when the price action broke below the one year top black rail of the expanding flat top triangle. As you can see it held support on three separate occasions but now with the H&S top and the red bearish falling wedge in place significant damage has been done to the original flat top triangle. The red bearish falling wedge is strongly suggesting that we’ll see lower price dead ahead before we get a counter trend rally.

The daily chart for the $SOX shows it broke down from a bearish falling flag and still has a little ways to go yet before it reaches its price objective shown at the bottom of the chart.

The monthly chart for the SOX shows why the 545 area may offer some decent support in the short term or even the long term. We just have to see what happens when the SOX gets there.

The daily chart for the SPX shows it has broken down from a blue 5 point bearish falling flag at the end of its almost nine month parallel 5 point bearish rising flag formation. We can now call it a bearish rising flag formation because the price action has broken below the bottom rail confirming the reversal pattern for us. The failure of the price action to reach the top rail, which would have been reversal point #6, now tells us the bulls were weak. It’s hindsight now but it still helps confirm the bearish price action from last week. Clues, it’s all about getting clues.

If this decline takes off to the downside the monthly chart for the SPX shows the previous highs made back in 2000 and 2007 should offer some strong support at 1550 or so.

I’ve been showing you this daily chart for the $NYA for awhile now which finally gapped below the neckline this past week after testing it on four separate occasions.

The daily chart for the EEM, emerging markets, broke below the bottom rail of its own bearish falling wedge a week before the US markets.

The weekly chart for the EEM shows it’s now just breaking out of a blue 5 point triangle reversal pattern. The only question is will we see a backtest to the bottom rail?

The daily chart for the RUSL, 3 X long the Russian stock market etf, broke below the bottom rail of a blue bearish falling wedge just three days ago which suggest there is more to go on the downside.

Lets look at one last bearish falling flag which has formed just below the bottom rail of a much bigger black bearish expanding flat bottom triangle consolidation pattern on the $XES. This area has been leading the energy sector lower.

The weekly chart for the $XES shows the bearish expanding flat bottom triangle which I’m looking at as a halfway pattern to the downside that is separating the first leg down out of the bearish rising wedge and our current impulse move down out of the expanding flat bottom triangle.

There are never any guarantees when it comes to the markets but I’m seeing several small bearish falling wedges and flags that usually lets us know that we’re in a strong move. Time will tell.

There is another sector in the markets that maybe showing confirmation of a strong move lower. The Transportation Average was one of the strongest sectors when the markets bottomed in 2009. The daily chart below shows it completed a H&S top last week when it broke below the neckline on Friday. The head is a 5 point bearish falling wedge with a blue bullish expanding falling wedge as the left shoulder and our most recent blue bearish expanding rising wedge as the right shoulder. A backtest would come in around the 8015 area.

The weekly chart for the Transportation Average shows you just how strong its bull market was by the formation of the two bullish rising wedge which is just the opposite of what I just showed you on the charts above with the smaller bearish falling wedges and flags. You can see the price action is just now breaking below the neckline.

The monthly chart for the Transportation Average shows the reason I had been so bullish on this sector for such a long time. This monthly chart below shows you one of the most beautiful H&S consolidation patterns I’ve ever seen. I’ve seen some pretty good ones but this one is right up there with the best of them.

The long term quarterly chart for the Transportation Average goes back about 100 years showing the really big patterns that have formed through the years. You can see the H&S consolidation pattern at the top of the chart. If this index ever declines down to the neckline it would probably be a very good clue that the correction or bear market or whatever it is we’re facing maybe over and a new bull market may begin.

Lets turn our attention to the US dollar as a lot of folks are becoming bearish which maybe the case in the very short term. I first showed you this long term monthly chart when the price action broke above the top rail of the massive bullish falling wedge. So far all the US dollar is doing is taking a well deserved rest after breaking through the top rail. As you can see it has had one backtest to the top rail so far and it might have another one where support should come in between 92 and 93.50 or so. Nothing is broken on this chart which shows a very bullish picture for the US dollar.

Below is a monthly combo chart for the US dollar and gold which shows the US dollar reversing symmetry back up as shown by the blue arrows and gold possibly running into resistance at the 1180 area. Once this consolidation period ends for the US dollar I expect it to rally up to the next blue arrow which comes in around the 108.60 area and then a time out to consolidate its gains. Remember a big base equals a big move which the US dollar has.

Lets take a look at some of the other most important currencies of the world and see what their long term charts look like because the big picture tells the truth. The $XAD, Australian Dollar, shows it still has a ways to go yet before it reaches in massive H&S tops price objective at a minimum.

The weekly chart for the $CAD, Canadian Dollar, shows a double H&S top and has recently broken out of a small H&S consolidation pattern.

The monthly chart for the $XBP, British Pound, shows it has been trading sideways since it crashed in 2008.

There are two separate chart patterns that we can look at in regards to the long term, $XEU, Euro. The first chart is the massive downtrend channel that began to form when the $XEU topped out in 2008. We’ve been watching this one for a very long time, well before it broke out from the blue bearish rising wedge. It did find support at the bottom rail of the downtrend channel and has gotten a bounce. Is it just a dead cat bounce or something more?

This second long term monthly chart for the $XEU is my preferred look which is showing a double H&S top. After putting in neckline #2 the euro has been in rally mode and it’s reversing back up to the brown shaded support and resistance zone which comes in at the 116.60 area which would be the high for the lower right shoulder for the neckline #2 H&S top. If the double H&S top plays out it will have a price objective down to the low made back in 2000 – 2001.

The 25 year chart for the $XJY, Japanese Yen, shows it has completed a double H&S top and has broken below the apex of its ten year triangle reversal pattern that launched the rally to its ultimate top in 2011 that shows a small H&S top that reversed the bull market.

From a short term perspective it looks like the Stock markets still have a ways to go down before we see a short covering rally. The many bearish falling wedges and flags tells us this is a strong move down right now. Be prepared tho for some high volatility as the bulls and the bears fight it for control of the trend. I promise I’ll have more on the precious metals complex this week but this move in the stock markets supersedes everything else right now. Big breakout moves don’t happen very often and when they do its nice to play the impulse leg until something changes. Again we should have a very interesting week ahead. All the best…Rambus

Copper is an important commodity when it comes to the health of the world economies and how it does often reflects how strong or weak the economy is. Its been awhile since we took an indepth look at Dr. Copper to see how healthy it is so tonight we’ll look at a few charts starting with a daily look.

The daily chart for Copper is showing it has completed a double headed, double H&S top, which is having a somewhat ugly breakout and backtest of the lower neckline #2. The smaller H&S #1 was picture perfect complete with a small blue expanding falling wedge for the left shoulder and a blue bearish rising wedge as the right shoulder. H&S #2 was very symmetrical as shown by the neckline symmetry line which shows the height for the left and right shoulders. Outside of the messy breakout and backtest, which happens sometimes, this chart is still very bearish looking.

To really get a feeling for what is taking place with Copper we need to look at the longer term charts that are far less likely to morph into something else. Once a multi year pattern is finished building out the odds are very high that it’ll complete its measured move at a minimum and often times the move will go much further. With really big tops, like most of the commodities and the precious metals complex have built out since they peaked out in 2011, are prime examples of what I mean. These multi year tops have led to a four year bear market in most cases.

Copper’s bear market started in early 2011 with just a small H&S top on the weekly chart which ended up being the first reversal point in a multi year seven point blue triangle reversal pattern. Note the breakout and backtest to the bottom blue rail confirming the bear market top was in place. After the initial move down Copper had a bigger backtest to the bottom rail of the blue triangle reversal pattern again confirming the blue triangle as a reversal pattern to the downside. Note the big backtest has taken on the formation of a H&S consolidation pattern which is the same H&S consolidation pattern I just showed you on the daily chart above. It is also very similar to the one I’ve been showing you on the SLV chart. What is also very interesting here is that neckline #2 on the daily chart above is just a very small part of a massive H&S neckline that goes all the way back to the lows made back in 2010 which is creating an even bigger reversal pattern. One last note on the weekly chart below. Notice how strong and near vertical the rally was after the 2008 crash low. This sets up a very good possibility that we may see a similar move down only in reverse, reverse symmetry, as show by the red arrows. There really isn’t much in the way of support until the 2008 crash low is hit around the 1.25 area.

The monthly chart really takes out the noise and gives you a nice clear picture of the two massive topping patterns, the seven point triangle reversal pattern and now the even bigger H&S top. Keep in mind I was one of the strongest bulls during the bull market years which started with a large double bottom reversal pattern. I have shown you many times in the past when you see a bullish rising wedge form in an uptrend you know that uptrend is very strong. Normally a consolidation pattern will form a sideways pattern or slope down against the uptrend,such as a bull flag but when you see a pattern slope in the same direction of the trend its a very powerful signal. As you can see Copper formed two bullish rising wedges during its bull market run that ended with a bearish rising wedge reversal pattern. The top was a reversal pattern because the price action broke below the bottom rail unlike the bullish rising wedges where the price action broke above the top rails.

The last chart for Copper is a quarterly chart which shows the entire history  going all the way back to 1972. Copper built out a massive 25 year triangle base that finally launched its bull market of a lifetime. The way to measure a pattern like this is to measure the first two reversal points in the triangle. You then add that distance to the breakout point to get your price objective. As you can see that massive triangle based called for a price objective up to the 3.81 area as shown by the black arrow at the top of the chart. The top of the massive 25 year triangle ended up offering support during the 2008 crash that reversed symmetry down as shown by the blue arrows. The crash was so hard that the price action actually ate into some of the support that the top rail had. There is a good chance that our current impulse move down that is just now breaking down from the massive H&S top may take the price action even lower than the 2008 crash low as that part of support is now gone. At any rate Copper is at a very interesting point right now on the daily chart all the way out to the long term quarterly chart.

I know you’re probably thinking that the price objective for copper is just a fluke and that it’s impossible for Chartology to show such a thing especially on such a long term chart. I would like to show you another very important commodity which is oil. This quarterly chart goes all the way back to 1982 which shows the huge trading range oil was in until it finally broke out in 2004 which launched its bull market of a lifetime. Oil created a massive double bottom as its launch pad. As I showed you on the quarterly chart for Copper I measured the double bottom base and added that measurement to the breakout point and got a price objective up to 146.15 which was about .85 cents shy of 147 its all time high. Just like Copper oil to found support at the top of the old highs during the 2008 crash.

As you are well aware of there are no absolutes when it comes to the markets but Chartology at least gives us a road map we can follow that lets us know if we’re in a bull or bear market which is the most important thing to understand when trading the markets. The bull market in commodities ended in 2011 and the bear market began which is still ongoing to this day. All the best…Rambus

Below is the combo chart we’ve been following very closely for a very long time which shows the big two year trading ranges for the HUI and GLD. Both of the big trading ranges started to build out with a big gap to the downside in April of 2013. They have taken on slightly different consolidation patterns but both two year patterns have downsloping top and bottom trendlines which suggests weakness. They both broke to the downside together about four weeks ago with one backtest to their bottom trendline so far. At this point in time nothing is broken yet with their breakout moves which still looks normal.

Below is a daily chart for the $XJY which shows a similar situation that the GLD finds itself in at the moment. You can see the big 18 month black bearish falling wedge which was made up of two individual smaller consolidation patterns which is fairly typical of big consolidation patterns. I’ve put a green circle around the breakout and backtest area that we followed at the time which showed a normal breakout but then the XJY had a strong backtest. If you look real close you can see a tiny H&S top that formed just above the bottom black trendline, labeled strong backtest, which when completed gapped down taking out the bottom black rail of the bearish falling wedge at the same time. And if you look really really close you can see one last little backtest to the bottom black rail before the impulse move finally got going to the downside. The reason I’m showing you this chart is because sometimes things aren’t textbook but the essence of the big black bearish falling wedge was still in play and worked out as expected.

First off I’m on a working one week family vacation down on the panhandle of Florida which is why I didn’t get to post any late Friday Night Charts. It just so happened that this week was the best week to get the family together before school starts in a couple of weeks. I will still be watching the markets and posting each day but if nothing important is happening I may knock off a little early.

I also want to thank everyone who is posting at the forum. It really is a great place to share your idea’s and ask question as we have some really talented folks there. As Sir Fullgoldcrown likes to say, “It’s all for one and one for all.” Whatever it takes to get an edge makes no difference to me as long as we get the edge.

In this Weekend Report I’m going to update some charts we’ve been following very closely in regards to the precious metal complex. I’m going to use the GDX as a proxy for the other PM stock indexes as it shows the volume. They’re all basically showing the same patterns which the combo triangle/H&S consolidation patterns as their last important consolidation pattern. There is also a very important but yet uncompleted bearish falling wedge that has been developing for the last three weeks. If there was ever a place for one of these types of patterns to form we’re at that point right now. These patterns tend to show up in fast moving markets at about the halfway point in the impulse move.

I’m going to just use the combo triangle/H&S consolidation pattern and the possible little red bearish falling wedge to look for a price objective. The daily chart below is a one year look at GDX which shows the all important low that formed in November of last year. I’ve always viewed that November low as the beginning of the consolidation pattern on GDX that ended at the end of June and the beginning of July. Using the little red three week possible bearish falling wedge as a halfway pattern I get two price objectives based on the two different consolidation patterns. The breakout from the black triangle gives us a price objective down to the 9.35 area while the breakout from the H&S consolidation pattern gives us a little higher price objective up at the 9.70 area. There is one more price objective I can put on this daily chart using the black triangle and the possible little red bearish falling wedge as a halfway pattern. The blue arrows shows the impulse method where I take the distance from the last reversal point in the black triangle and measure down to the first reversal point in the little red falling wedge. I then take that measurement and add it to the last reversal point in the little red falling wedge which gives us a price objective a little deeper down to the 8.65 area. So, just based on these two consolidation patterns we may see some type of low between 8.65 and 9.35 or so.

Below is a long term daily chart that shows the previous impulse move down in 2014 which shows a little red triangle as a halfway pattern. As you can see GDX failed to reach the price objective by about a point or so. Price objectives gives us a place to look for the impulse move to run out of gas or to start building out another consolidation pattern. Sometimes the price objectives can be dead on the money while other times they can be off a bit. The best way to use price objectives is to use them in conjunction with other TA such as support and resistance zones which allows you to paint a picture you can follow.

Now lets look at the long term weekly chart to gain some perspective on where we’re at and how things may progress from here. This chart shows the two big topping patterns that led to massive declines once their necklines gave way. For those that knew Chartology these were money making opportunities. Back during the 2008 crash we didn’t have the 3 X short etf’s for the precious metals complex. I used DUG and SMN which were 2 X short etfs to play that deflationary environment at the time. It was a magical ride as very few investors seen what was about to take place and even fewer gold bugs had any idea what was about to happen. I was expecting a strong decline once the 2008 H&S top gave way but I had no idea to the extent and magnitude of decline.

Now I believe we are at another important critical juncture as we’re now three weeks out of the bearish falling wedge. The breakout occurred on very heavy volume with a big breakout gap. You can see three important trendlines that the GDX had to break in order to get to where it’s at right now. I’ve added two price objectives based on the two measuring techniques I use to give us a place to look for a low of some kind in the next several months or so. The bottom line is, from the shorter term daily charts to the longer term weekly charts the seven and a half to the nine area on GDX may give us a good place to exit our current position in DUST.

Now lets look at GDXJ which is setup just a little bit differently than the GDX. It to has two consolidation patterns the bearish rising wedge at the top and a bearish falling wedge at the bottom. Instead of the little red bearish falling wedge we looked at on the daily chart for the GDX, the GDXJ has built out a possible little red triangle consolidation pattern just below the bottom rail of the lower blue bearish falling wedge. I have shown you many examples in the past when we see a smaller consolidation pattern form just above or just below an important trendline that little pattern can give the stock the energy it needs to really begin its impulse move, in this case down. As you can see both measurements come in just below 12 even tho they’re taken from two totally different areas on the chart. In order to get the next impulse move going to the downside the first thing we need to see happen is for the little red triangle consolidation pattern to break down. We’re close but just not quite there yet.

Below is a long term weekly chart for the GDXJ that shows its massive H&S top and the two blue wedges that formed one on top of the other. Again note the big breakout gap on heavy volume that accompanied the breakout of the lower bearish falling wedge. Strictly from a Chartology perspective that’s exactly what you want to see. Note the breakout and backtest that took place at the neckline and the bottom rail of the bearish rising wedge that took roughly four to six weeks to complete. This week will start the fourth week of the breaking out and backtesting sequence.

Below is another weekly look at the GDXJ which shows a possible bigger bearish falling wedge similar to the one I showed you earlier on the GDX chart. Unlike the GDX, GDXJ is doing a ping pong move at the moment between the bottom rails of the two falling wedges. So far from a Chartology perspective nothing is broken yet that would call into question this possible scenario.

From a Chartology perspective everything is still lined up for at least one more impulse move lower over the next month or two. It has been a long four year bear market that may be coming to an end if these charts play out. As always there are no guarantees what the future holds but one thing I can assure you of is that I’ll be following the price action for clues on what is happening in this once loved sector. All the best…Rambus

If one is looking for a continuation of the deflationary environment we have found ourselves in since the 2011 top in the commodities complex, copper would be a very important piece of the puzzle. The general theory is that if copper is doing good so should the economy and vise versa. So how does copper look these days?

It looks like the Energizer Bunny may be running out of energy .

Lets start with a daily chart for copper which is showing us a double H&S top that is in the process of breaking below neckline #2 which had a strong backtest this week. The H&S pattern is very symmetrical as shown by the neckline symmetry line that measures the height for the left and right shoulders. The head of the H&S top is a double top that reversed the rally that started at the beginning of this year. Outside of the strong backtest this week this H&S consolidation pattern looks very good. We just need to see some follow through to the downside for confirmation.

The weekly chart for copper shows some nice Chartology also. Since the bull market ended in 2011, along with most other commodities and the precious metals sector, copper has been building out a massive blue 7 point triangle reversal pattern that is actually the head of an even bigger H&S topping pattern. Copper broke below the bottom blue rail of the triangle reversal pattern late last year and has been building out the H&S consolidation pattern as the backtest and right shoulder which I showed you on the daily chart above. What is also interesting about this long term weekly chart is the neckline I showed you on the daily chart above, which took about six months to build out, is also the same neckline of the massive H&S top that stretches back over six years. Copper closed this week at a new multi year low.

The 20 year monthly chart for copper shows its beautiful bull market that began with a three year double bottom reversal pattern. Whenever you see a bullish rising wedge in an uptrend you know the move is strong. Copper formed two bullish rising wedges during its bull market. The big combo topping pattern may show us some reverse symmetry to the downside as the rally off of the 2008 crash low was very strong and straight up, red arrows. The blue arrows shows you some reverse symmetry that formed during the vertical move up out of the red bullish rising wedge and the 2008 crash. The massive H&S top is just a few months longer in time than the double bottom which is another form of reverse symmetry. These charts above show copper right on the verge of really entering into its next impulse move down continuing its bear market that began in 2011. Have a great weekend.        All the best…Rambus

PS: Below is a 45 year chart for copper for your viewing pleasure.

This week marked a few milestones I’ve been waiting patiently to arrive in the PM sector.. When you been watching a chart pattern start to develop over a very long time you’re kind of  surprised when the day finally arrives that completes the pattern. For instance the weekly chart for gold which shows the parallel downtrend channel has two big consolidation patterns that have formed between the top and bottom rials. The lower two year blue bearish falling wedge finally broke through the bottom rail  this week at the exact place and time-frame I was hopping for. Some folks would call it just plain dumb luck but when you see something develop that  you’ve been following for many months and even years in some case, it gives you some confidence that you’re on the right track.  Note the last bar on this weekly chart we’ve been following for a very long time finally broke through the bottom rail of the blue bearish falling wedge right to the week. Next we’ll have to see how gold interacts with it on any backtest.

A weekly line chart for gold shows it closed below bottom rail of its blue bearish falling wedge. What this tells us is that we’ve been on the right track for well over a year ago but this week finally gave us some confirmation that the consolidation pattern is breaking down now. It gives you a sense of where you are relative to everything else on the chart including time and price.

The HUI / GLD combo chart shows they both breaking below their two year bottom support lines this week with a huge breakout gap which gives us a little more validity that what we’ve been following was actually the correct consolidation patterns. Again what we want to see now is a nice clean backtest to the bottom rails before prices move lower.

This last chart for tonight  is a weekly look at the HUI which is showing a possible bearish falling wedge which really fits into the potential last phase for this bear market. This week we got a big clue when the bottom rail was gaped over to the downside on Monday.  Again how the price action interacts with the breakout area is going to be critical to the over all price objectives. Next week promises to be a very interesting week because so many  PM stocks and PM stock indexes broke important support lines this week  going back several years in some cases. I hope everyone has a great weekend and enjoy the summer which is going by too fast. All the best…Rambus

Editor’s Note :

Looks like this PM Impulse Move is Gaining Traction Rambus .

There is a lot to go over tonight in regards to commodities and the precious metals complex. A while back I wrote a report on the commodities in general getting ready for the next possible leg down which will fuel the deflationary pressures that really took hold last about this time. That’s when the US dollar finally broke out of its massive base and charged higher topping out in March of this year and has been consolidating those gains ever since. Lets start by looking at the big base the US dollar broke out of last year at this time and the strong impulse move up as shown by the string of white candlesticks. That’s what a strong impulse move looks like when all the pent up energy finally has a change to escape. That powerful impulse move out of that big base was strong enough to take out a very long term trendline going all the way back to 1985 or so. That thirty year top rail of the bullish falling wedge has now reversed it role to what had been resistance to now support during this consolidation phase the US dollar has been going through since March of this year. Below is a 15 year combo chart that has the US dollar on top and gold on the bottom. Notice how the US dollar is reversing symmetry back up based on the decline that started at the 2000 top as shown by the blue arrows. Once the dollar takes out our current high the next area I’ll be looking some resistance to show up will be the 108 area. This combo chart also shows you the big positive divergence the US dollar had with gold which was the first real big clue for me that the dollar was ready to rumble. Note the low for the US dollar in 2008 and the high for gold which was normal at the time. From that point in 2008 gold almost double in price but the US dollar actually made a higher low vs the 2008 low. That’s what really got my attention. Note the last bar on the monthly gold chart which is now trading below the previous lows of the last two years. They say a picture is worth a thousand words but I think this combo chart is worth a whole lot more. Knowing what the commodities did during the US dollar’s big impulse move out of that big base, lets review some of the commodities indexes I showed you a while back, when I suggested the the other shoe maybe getting ready to drop in regards to the ongoing deflationary spiral. The first chart is a daily look at the CRB index which gapped out of an eight point diamond consolidation pattern. It’s now approaching the low made back in March. Stepping back about four years or so you can see how the diamond consolidation pattern fits into the big decline. I’m viewing this diamond consolidation pattern as a halfway pattern to the downside. Notice the decline that occurred during the first impulse move down out of the big black triangle. I expect a similar move to take place that matches the first leg down in time and price. It doesn’t have to be exactly the same but we can use it as a guide to let us know where we’re at once the impulse move breaks the March low. Below is a long term monthly candlestick chart which shows us the massive H&S top the CRB built out before the first impulse move down I showed you on the daily chart above. The diamond, red circle, has formed on a very important support and resistance zone, brown shaded area. As I have shown you many times in the past a stock will make a small consolidation pattern just above an important support and resistance line before it finally breaks it. The moment of truth has now arrived for the CRB index. One last note on this long term monthly chart for the CRB index. With the US dollar’s monthly candlestick chart I showed you a string of white candlesticks in its strong impulse move up. Here you can see this monthly chart for the CRB index shows a string of black candlesticks during its first impulse move down showing us the inverse correlation is alive and well. Another commodities index I follow is the $GNX commodities index. This index bottomed out a bit earlier than the CRB index as it first bottomed in February of this year. This daily chart has some very nice Chartology which is showing us a seven month black bear flag that is made up of bullish rising wedge and a triangle reversal pattern. The breakout from the bottom rail of the bear flag was picture perfect with a nice clean backtest. The long term daily chart for the GNX puts the bear flag in perspective within the context of the big move down out of the black triangle. Longer term members should remember the little blue bearish falling flag that formed roughly at the halfway point in the first impulse move down that was also showing up on most of the currencies at the time.  I know it seems impossible that we could experience another leg down equal to the first impulse move down with the blue bear flag showing up somewhere in the middle but until something changes this scenario this is my game plan. Now I would like to show you some charts for the energy sector to give you a feel on how we maybe just at the halfway point in this next deflationary episode. The first chart is daily look at the $SPEN which is the SPX 500 energy sector chart. As you can see it bottomed out in December of last year and has consolidated that decline by building out a seven month bear flag. Again it had a perfect breakout and backtest before moving making new lows for this move. To put the bear flag in perspective we need to look at the weekly chart. The blue arrows shows how I measured for the price objective which I call the impulse method. The $XOI, oil index, shows a bearish rising wedge complete with breakout and no backtest. The very long term monthly chart for the XOI shows you just how dire the situation is for the index. The bearish rising wedge I showed you on the weekly chart above is just the backtest to the bottom rail of a massive bearish rising wedge reversal pattern. Note how the bottom rail of the blue bearish rising wedge held support for six years but once it was broken to the downside it reversed its role to resistance that held for six months or so. Before we move on to some precious metals charts I would like to show you one more chart that is just starting to breakdown and that is the XES, oil service index. It has formed a flat bottom triangle consolidation pattern and has just recently broken below the bottom rail which is leading the oil sector lower as it’s making new lows for this move. Now I would like to update you on some the precious metals stocks we’ve been following very closely. The first chart is a weekly look at gold that shows the parallel downtrend channel with the black and pink rectangles that measures time and price. I’ve been saying, in order to keep the symmetry going vs the impulse move out of the 2013 six point blue rectangle, I would like to see our current blue bearish falling wedge break the bottom rail by the middle of July. After two years of consolidating that first impulse move down gold finally broke below the bottom rail of its bearish falling wedge halfway pattern on Monday of this week with a nice breakout bar. I can’t rule out a backtest to the bottom rail but if we do get one it should come in around the 1110 area. Long term members know that I’ve been waiting for this breakout for a very long time. We still have two more days to trade yet but this weekly line chart shows the breakout that is underway. A weekly closing below the bottom rail would be very positive. The very long term monthly chart for gold shows the massive H&S top that actually started to build out in 2010 and broke below the neckline just over a year ago and has been in backtest mode until recently. You can see the price action is now starting to fall away from the neckline now beginning its impulse move down to the possible brown shaded support and resistance zone. From a Chartology perspective the massive H&S top is a classic. Note how the left shoulder and head formed inside the expanding rising wedge, which was the bull market. Once the bottom rail was broken to the downside the backtest formed the right shoulder which we watched in real time what seems like an eternity ago. The monthly chart for silver shows a similar massive H&S top to match golds. It has some beautiful symmetry as shown by the neckline symmetry rail that shows the height for the left and right shoulders. The last time I posted this chart I said I would  expect silver  reaches the brown shaded support and resistance zone. But the price objective shows an even lower possibility . This next chart is a combo chart that I’ve been posting about once a week or so so you could follow the price action in real time. As you can see both the HUI and gGLD both broke below the bottom rails of their two year consolidation patterns this week with a big breakout gap. I wish I could rule out a backtest to the bottom rail but it’s still a possibility. Below is a weekly chart for the HUI which is showing a possible bearish falling wedge which gapped below the bottom rail this week adding another clue to the possible validity of this potential halfway pattern. A backtest would come in around the 121.25 area for confirmation if the bottom rail is the real deal. I have taken a great deal of flak over the years from chartists who insist there is no such thing as a bearish falling wedge . As I have pointed out many times , these down sloping patterns Do often breakout in the direction of the trend . They appear in strong moving markets . To review you can read this Post , which is buried in the Timeless Tutorials section “Wedges , Facts and Fictions ” http://rambus1.com/?p=9256 Now see below a very interesting chartology pattern , The Bearish Falling Wedge . This one is made up of several contributing patterns . As the saying goes The Whole is greater than the sum of its parts . Just so you know that I’m not totally crazy for thinking the HUI could be building out a bearish falling wedge halfway pattern below it the 2008 crash in the HUI. Note the double H&S top that led to the 2008 crash. After forming the little red bear flag halfway pattern the price declined down to its price objective at 253, first blue arrow point up, which was the first reversal point in the blue bearish falling wedge consolidation pattern. Note how volatile the price action was when the blue bearish falling wedge was building out. The breakout was and backtest were right on the money which led to the ultimate bottom. Is history going to repeat again? I have just enough time to update you on several PM stocks that are building out their own bearish falling wedges. Keep in mind that bigger chart patterns can be made up of several smaller ones when you look at these charts. GG formed a blue bearish rising wedge which broke down and then built out a H&S consolidation pattern which shows a potential bearish falling wedge that broke below the bottom rail this week along with the HUI. The monthly look for perspective which shows GG trading right on the 2008 crash low. The weekly chart for DPM.to shows the price action sitting right on the bottom rail of its bearish falling wedge. AUY broke out of its red bearish falling wedge about a month ago after forming a bigger blue bearish falling wedge last year. The monthly chart for AUY for perspective. EDR.TO is testing the bottom rail of its possible bearish falling wedge. GLDX is testing the bottom rail of its potential bearish falling wedge. SIL cracked the bottom rail of its potential bearish falling wedge this week. The long term monthly chart for perspective. All these charts above should give you a feel for what maybe taking place right here and now in the commodities complex. It appears to me that the second leg down is now underway. Outside of a possible backtest in some cases most of the consolidation patterns have already broken down. We’re living in interesting times to say the least. All the best…Rambus