In this Weekend Report I would like to take an indepth look at gold that is showing a potential small double bottom. There is also a larger double bottom or part of a bigger consolidation pattern that also needs to be looked at. Some of the charts I’ve shown you many times and some are charts that I follow I have never posted before but I still keep a close eye on. As you will see, this area we are in right now, is very critical to the short term and the long term look for gold. Remember we have to keep an open mind and let the charts speak for themselves.

This first chart is a 10 month daily look at gold that shows our current small double bottom that broke above the double bottom hump on Thursday with some follow through on Friday. If you look to the left hand side of the chart you will  see the June low that was also a double bottom of the unbalanced kind. Note how the Double Bottom hump, at the June low, held support many times, when it was backtested from above at 1265. The next thing I would like to show you on the chart below is the positive divergence on our current short term double bottom and also the positive divergence off the June low which is six months in the making. I’ve add what I consider to be the most important moving averages for gold which are the 50, 150 and 300 dma. Going back to the June low you can see how much work gold needed to do before it finally broke above the 50 dma. Once it did it was a straight shot up to the top of the possible trading range where the 150 dma came into play and held resistance. The 150 dma also held resistance at the October high. You can see where the 300 dma will come in IF gold can reach the top of the trading range around the 1425 area. So this chart represents the short term look at gold. Note that we sold most of the Kamikaze Portfolio on the second bar on the far right hand side of the chart because of the possibility of a double bottom forming. Until that point we didn’t know which way the price action would go.

This longer term daily chart for gold shows the possible new trading range between 1180 and 1425. If this is going to be a consolidation pattern then we are at the 3rd reversal point right down here. We would then need one more reversal point #4 to complete a consolidation pattern which could show up at the top of the trading range where the 300 dma will come into play.

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The next gold chart shows the fanlines that had been working so well until we hit this double bottom area. The move above fanline #4 shouldn’t have happened. That area should have held resistance. The next area of resistance is the heavy black dashed S&R rail that comes in around the 1260 area. This is how gold is talking to us. When it has the energy to start taking out overhead resistance rails it’s showing strength and we have to respect that.

Below is our gold Diamond that we’ve been following for some time now. The apex of the big blue Diamond represents a strong area of resistance which comes in around the 1295 area. A move above the apex will negate the blue Diamond which would put the double bottom, that I showed you on the charts above in play. So the apex is another important area to keep and eye on.

There is another important resistance point which comes in around the neckline of the H&S consolidation pattern that is part of the blue Diamond pattern we looked at earlier. Again a break above the neckline will negate the H&S consolidation pattern.

We’ve talked about inflection points which are areas that can break either way. Gold is at an inflection point right here trading at the June low. At this point we have to give the advantage to the bulls as they have already defended this area once before. If this low can hold, which would be reversal point #3, that could setup a good move higher. You can see a very strong positive divergence on the RSI at the top of the chart.

This next weekly chart for gold puts our possible consolidation pattern into perspective. Note the neckline extension rail that is taken off the 2008 inverse H&S bottom. We’ve been watching how the price action was going to interact with that important trendline. As you can see it has held the June low and now the Decembers low so far. As with any trendline you put on a chart it will act as support when the price action is above and resistance when the price is below. So far the neckline extension is holding support.

I mentioned that I spend almost as much time looking for the bullish scenarios for the markets as I do the bearish scenarios. This chart below is similar to the chart above except I’ve added what could be a bullish expanding falling wedge as a very large consolidation pattern that has formed since the 2011 high. I just want to state right here, I’m still in the bear camp without question. Gold has a ton of work to do to turn this chart positive. At the very least gold is sitting on support right here at reversal point #3 which is really a multi year low going back to 2010. I’ve labeled the reversal points in the falling expand wedge with bold black numbers. As you can see if the June low holds, for whatever reason, that would mark the 4th reversal point within that pattern once it broke the top black rail. Note the 2008 bullish expanding falling wedge that looks similar to our possible current one.

Lets take a very long term look at gold that shows the important chart patterns since the bull market began. This chart shows how our possible current bullish expanding falling wedge would fit into the bull market that began in 2001. Note all the white candles that formed in each impulse leg up during the bull market years when the price action broke out of one of those consolidations patterns. Note all the black candles that have formed during gold’s bear market impulse legs down. You can see the black candles that were made during our last decline that stopped at the neckline. It is way too early yet, as the month of January is just beginning, but if gold is to find a bottom here it would be nice to see a white candle at the end of the month.

This next chart is a very long term look at gold that goes all the way back to the 1980 high. You can see the multi year huge bases that were made to launch gold’s bull market. The chart  above had a bullish perspective, this one has the potential bearish look that we’ve been following for quite awhile now. The million dollar question right now is is gold building out a right shoulder for the H&S top? There is still one more scenario I could throw in throw in here that nobody is looking at. This is one of those WHAT IF moments. What if gold is building out a high level consolidation pattern ranging from the all time high at 1920 and the low at 1180. If you look at the price action in the 90’s you can see there were some very long periods of side ways price action. It’s only a possibility but we have to be aware that this can happen.

Below is a combo chart that has the HUI on top and gold on the bottom. As this chart shows the HUI broke down well ahead of gold. Even today the HUI is trading below its June low while gold has found support there. So who’s leading who?

There was an important development this week in the GLD to XAU ratio. I have shown you this chart many times as it has been building out a rising wedge formation. This week it broke below the bottom rail. This could be a very big deal for the precious metals stocks as they have not been this far out of whack with gold in history. Is it possible a means to something halfway normal could occur with this ratio? If we see this ratio continue to fall we’ll know something is in the wind.

I want to show you one last chart that compares the GDXJ to GDX, the small caps vs the big cap ratio. As you can see this ratio put in a nice H&S top as the big cap precious metals stocks were outperforming the small caps. Just recently this ratio put in a small double bottom and has broken out. If this ratio can trade above the neckline extension rail that would be a really positive event. I know it should be the other way around where the big caps  lead and the small caps play catchup according to the fundamentals but for the last couple of weeks the juniors have been outperforming the big caps.

What these charts above are tell us is that we are at an inflection point in the precious metals complex. Gold is King so if it’s putting in a bottom the rest of the complex will follow. This week should be very telling as everyone will be back from their Christmas break. Playing the long side for awhile will be a nice break as there are so many more options to play with. One can just buy GLD, SLV or the GDX with no price depreciation. And of course we can buy individual precious metals stocks as well. I’ve been working on a shopping list for some of the precious metals stocks that I may recommend soon for at least a short to intermediate term move. You should be working on your own also. Stay strong. All the best…Rambus

Rambus Chartology has been focusing on the Precious Metals for the most part as that is where the most compelling Chartolgy has been .

But tonite I would like to switch gears and visit a different sector which is looking very interesting to say the least

About every two or three months or so I do a post on the Basic Materials sector just too keep an eye one what is happening there. It has been somewhat mixed for the most part but it now seems to be gaining some momentum. As you know I’ve taken a couple of position related to the area recently. I tried the shippers a month or so ago but got stopped out on a hard backtest but I could see the potential starting to build for this undervalued area. The latest bout of strength still hasn’t shown up in the CCI commodities index as it has been flat lining on top of a long term support and resistance rail that goes all the way back to 2007. So far the CCI has corrected 50% of the move off the 2008 low which it has been holding for some time now.

The GNX is still trading inside a big blue triangle that maybe getting close to breaking out. That top blue rail has five touches on it so we know it’s hot.

The Baltic Dry Index was the first real good indicator that the basic materials  stocks were finally bottoming and a potential decent rally was beginning. As you can see it produced a nice five point triangle reversal pattern as its bear market low complete with a backtest.

There are several etf’s out there that track the basic materials sector. One of my favorite ones is the IYM that is now just testing its all time highs going all the way back to the 2008 high. Its built out an almost two year blue triangle that has broken out and had its backtest. As you can see the price action is sitting right on the all time high, black dashed horizontal rail, at the top of the chart. Regardless of what we think of the fundamentals we have to respect the strength in this sector.

Another etf that tracks the basic materials sector is the XLB.

Below is a weekly 3 X bull etf for the basic materials sector, MATL, that closed the week at a new high for this stock. It has very light volume though.

Lets now look at some of the stocks that makeup this sector as some of them are part of the Dow Jones. DD is a big part of the Dow Jones and shows why the Dow is still making new highs. On the monthly chart below you can see a beautiful red triangle that broke out sometime ago and is currently in an impulse leg higher making new all time highs.

The monthly chart for IP shows it’s trading at all time highs.

Dow Chemical is going to close out the month of December at new all time highs.

CNX is still well below its all time high but it looks like it could be forming a flat top expanding triangle.

APD is breaking out to new all time highs.

AA is another stock that has recently broken out of a blue triangle consolidation pattern.

The weekly look for AA shows there is still a lot of room to move higher for this stock. It created an 11 point bullish falling wedge reversal pattern to end its decline.

There are several areas in this sector that have yet to really takeoff and are still undervalued. There’s an old saying that states, how copper trades so does the stock market. This means if copper is strong so should the economy and vise a versa. I think copper finally showed its hand this week after breaking out if a nice eight month inverse H&S base. Its been lagging the Dow Jones for quite sometime but maybe it’s getting ready to play catchup.

The weekly look at copper shows just how weak its been since topping out in 2011. It built a beautiful 6 point blue triangle consolidation pattern but so far has failed to follow through to the downside. Note the small inverse H&S base on the lower right hand side of the chart that is the same inverse H&S base that I showed you on the chart above. This could be a very important development.

As I have shown you many times in the past, a triangle can morph into a bigger triangle, that doesn’t change the direction of the move, but just creates a bigger triangle. The monthly chart below shows how copper is morphing into a bigger triangle. Note the two red circles that shows the failure of the top and bottom rails that is creating the bigger blue triangle consolidation pattern.

Coal is probably the weakest area inside the basic materials sector. It built out a beautiful H&S top with a blue triangle just above the neckline and red bearish rising wedge just below the neckline. This is usually a bearish setup. As you can see KOL, the coal etf, is basically trading in no man’s land at the moment.

Even though the KOL, coal etf, is trading sideways there is a coal stock, ACI that is close to breaking out of a 5 point blue triangle reversal pattern to the upside. This stock looks like a very good bargain in here for the next year or two if it takes out the top blue rail.

The weekly chart for ACI shows why it could be such a great bargain down here. Buy low and sell high applies to this stock. As you can see its been in a three year bear market with one consolidation pattern forming below the next. Now we may see a 5 point triangle reversal pattern forming at the bottom. This is a perfect Chartology chart of a bear market, complete with a topping pattern and hopefully a bottoming pattern with consolidation patterns that make up the bear market.

I believe the hottest area in the basic materials sector right now are the steel companies. First lets look at the SLX which is the steel eft. I have to admit I’ve been watching this rally taking place for sometime now and never pulled the trigger. Its been building out some very nice chart patterns that have shown this etf to be in a bull market. Note the nice inverse H&S bottom followed by the red bull flag that formed just below the neckline and the red bullish falling wedge that formed just above the neckline. As I have shown you in the past, when you get a consolidation pattern that forms just below the neckline and then one that forms right on top of the neckline this is almost always a bullish setup. As you can see the SLX broke out of a 6 point blue triangle last week.

When looking at the daily chart above it looks like we already missed the big move up but when you look at the weekly chart you can see the rally is just really getting started. Just like the copper chart I showed earlier that had a morphing triangle, SLX also has the same morphing triangle as shown by the red circles. These morphing triangles can be very aggravating as they will give you a false buy and sell signal. When the price action doesn’t follow through after the breakout that is when you start to take into consideration that the triangle maybe morphing, It’s still valid only it will be just a bit bigger than previously thought. Most give up on these types of patterns but I find them very useful when its all said and done.

Lets now look at some individual steel stocks that are showing some strong moves taking place. Of all the steel stocks I follow AKS has probably been the strongest. You can see it had a nice inverse H&S bottom that completed with a big breakout gap. It hasn’t hardly stop to rest yet.

The weekly chart for AKS shows there is still a lot of upside potential left in this stock. At some point it will start to form a good consolidation pattern and that’s when it will be time to pounce.

NUE has been one of the strongest steel stocks as shown by the weekly chart. Note the red triangle that formed right on the top rail of the blue triangle. This was a bullish setup.

The last chart I would like to show you is a weekly look at US Steel that put in a five point bullish falling wedge reversal pattern to the upside. As you can see there is a huge potential for this stock.

The basic materials sector is telling us that there is truly a global recovery taking place at the moment. How long this recovery lasts is anybodies guess. The shippers have been confirming this for sometime now and we can’t ignore what the charts are telling us. It’s never just black and white as there are always cross currents running through the markets that can make them difficult to read sometimes. With Chartolgoy on our side we can keep on top of the changes even though the fundamentals might not agree with what the charts are saying. It looks like there are some good bargains in this sector that we can take advantage of if we can keep a clear mind. All the best…Rambus

Below is a combo chart that I’ve shown you several times that has the INDU:GOLD ratio on top and gold on the bottom. So far the parabolic move in the ratio and gold is still playing out. As you can see on the gold chart below gold touched the parabolic arc this week with the ratio chart on top doing the same. This was an important week for this ratio and gold to keep the parabolic moves going in each direction.

ABX tested its parabolic arc this week and then sold off sharply leaving a nice long tail on the weekly bar.

Lets look at a ratio chart the compares gold to the CCI. As you can see on the chart below gold has been under performing a basket of commodities as it’s making a new lower low this month. The massive H&S base measured out almost exactly to the top. Note the red 5 point triangle reversal pattern that called an end to gold out performing commodities in general.

The HUI to gold ratio chart shows the breakout from the red bearish falling wedge still in play as its been in backtest mode since breaking out. May seems to be showing up as a time objective with some of the charts I’m following. For me price is more important than time which goes against some of the trading disciplines out there. So if this ratio hits the price objective first that will take precedence over time.

I’ve shown you this gold : XAU chart several times in the past which shows just how bad the big cap precious metals stocks have been under performing gold. This chart goes back 30 years and never has it been this far out of whack. The problem is that it’s still getting worse as there is a good chance this ratio will make a new all time high by the end of December. It is what it is until it isn’t. Time to hit the hay. All the best…Rambus

Lets get right to the charts tonight as everything seems to be going according to plan so far. Today’s move in gold seemed volatile but when you look at the daily chart, the price action fit right into another little Diamond consolidation pattern, that has formed just below the bigger blue Diamond consolidation pattern. When you look at the very last bar on the chart below you can see the high today came right up to the top rail on the right side of the Diamond and then fell away. Then just towards the end of the day it broke through the bottom rail. So it looks like our small consolidation phase maybe coming to an end. If we get a backtest tomorrow, to the bottom red rail, it would be a good low risk entry point to add another small bite to your existing position.

Lets look at a daily chart that shows the fanlines I’ve been using that shows how gold has been backing and filling coming down from its most recent high. The June low is the starting point for your fanlines as that area was the most important low in this decline. Note, when each fanline is broken to the downside you generally get a backtest to the underside at some point. Normally after the 3rd fanline is broken is when the pattern is complete. In this case I’ve added a fourth fanline which gold closed right on today. Note the heavy black dashed horizontal support and resistance rail that runs through the chart. Above is positive and below is negative. Notice how its reversed its role from support to resistance at the end of November.

If you look really close, at this monthly chart for gold, you can see it’s now trading below the month of November. With just a little more downside action it will be trading below the all important June low which will setup a lower low for this bear market. So far this reverse symmetry chart is working out beautifully.

As you can see on this last chart for gold the possible neckline, of a huge H&S top, is within striking distance. Charts like this is what makes this game so interesting because you can see what the potential is before it happens. And then to watch it unfold in real time is just the frosting on the cake. So far so good.

Silver is also forming a small red Diamond consolidation pattern just below its big blue Diamond. Unlike gold silver didn’t breakout of its little red Diamond pattern today so we have to wait for confirmation before we add a few more shares of DSLV.

Lets now look at a weekly chart for SLV that shows us the two pretty Diamonds that have formed. I know it feels like this backtest has taken a long time but if you look at the bigger blue Diamond the backtest there took about 12 weeks vs about seven weeks with our smaller red triangle. The apex of the Diamond is critical resistance. We don’t want to see that area violated under any circumstance.

Below is a long term monthly chart for silver that shows neckline being tested on this huge potential H&S top. As I have said several times, I really want to see how silver interacts with this all import trendline as it will give us some good clues to go by. So far it has bounced off of the neckline once so it’s telling us it is getting warmer.

Lets now take a look at the HUI with a simple brown shaded support and resistance zone that has worked out beautifully so far. The black arrows shows previous support points that should now turn into resistance since the HUI has broken below the support and resistance zone. Keep in mind everyone that bought above that brown shaded support and resistance zone is underwater and looking for a place to get out even if they can. This should put a ceiling on the price for the HUI.

Below is the HUI Diamond consolidation pattern that we’ve been following for quite awhile now. The breakout is still under the gravitational pull from the blue Diamond but with a little more downside effort the HUI will finally break free and move down to the next area of support.

I haven’t shown you this chart for the HUI yet that has an expanding downtrend channel. I did show you an expanding uptrend channel on the gold monthly chart above that has that big potential H&S top pattern forming. This expanding downtrend on the HUI is just the opposite, it’s getting bigger at the bottom. I’ve been following this chart very closely since the 6th reversal point was hit on the blue Diamond that coincided with the top rail of the expanding downtrend channel. This chart starts at the top right shoulder of the massive H&S top pattern, labeled with the bold S. This is what that decline has looked like since the top at 520. Note the smaller blue bearish falling flag that began the expansion of this downtrend channel. This chart looks very ominous to me. If I was a bull and seen this chart I would be very scared of the consequences if it plays out like I think it will. You can see the breakout from the blue Diamond is well underway with nothing but air below.

Below is a weekly line chart for our blue Diamond that shows the top of the right shoulder that we just looked at on the chart above.

The weekly line chart shows us a bearish falling wedge that I consider to be a halfway pattern. Same consolidation area just a different look.

This last chart I would like to show you tonight is a monthly line chart for the HUI. Keep in mind a line chart just shows the closing price, whether it’s a daily, weekly or monthly look. For me this chart really puts things into perspective. As you can see, on a monthly closing basis, we are now trading down at the 2008 crash low. Pretty incredible when you think about it. I don’t have time to show you tonight but alot of the big cap precious metals stocks still have a long ways to go down yet before their price targets are hit. So can the HUI go lower than the 2008 crash low? Stick around and find out. All the best…Rambus

Tonight I would like to update some of the Diamonds that have been in play for several months now. Chartology is giving us an edge over most of the other technical disciplines out there , in that it has been showing us the way lower to a T. Nobody but Rambus Chartology folks are seeing the precious metals stocks from this angle that got us short, for the first ride down, one year ago during the first impulse leg down. It was in the first week of December of 2012 that we took our first DUST position and added to it from there until the Kamikaze Portfolio was full. Here we are one year later and we have the exact same setup staring us in the face. This time we are one step ahead of the game by being fully invested in the Kamikaze Portfolio before things broke down.

I have described to you how hard it is to get your initial position to stick before you may get stopped out. Just think of an impulse move as two steps forward and one step back. If you wait and buy in the second step, because it feels more comfortable, you will find yourself underwater at some point which makes it difficult to hang on even though you are right taking a position. It’s that step back that gets a lot of investors in trouble. Yesterday, I noticed a couple of red quotes, amongst the sea of green, where we had entered the last of our positions in the Kamikaze Portfolio. This week was the step back. If you had bought back up inside the Diamonds, you felt some pain, but not the kind of pain if you had bought your stock in the last three weeks or so after the breakout. Your emotions will start to kick in and you will question if you’ve made the right decision.

So lets look at some of the Diamond formations and see how they have showed us the way lower, while most investors don’t have a clue to what is actually happening in the precious metals sector. They keep looking at everything but the price action which is the most important aspect to making money in the markets especially in an impulse move, IMHO.

The GDM daily chart shows us its beautiful Diamond consolidation pattern which is now in its fourth week down from the breakout.

The weekly chart for GDM shows the impulse move down that is now in its fourth week. From a Chartology perspective this chart is as clear as day as to what’s happening. It just doesn’t get any prettier.

The monthly chart for GDM really puts the bear market into perspective. You have the massive H&S top that reversed the rally off the 2008 crash low. Note the last 5 bars on this monthly chart. Each one is making a lower low and the price action is now trading below the June low that so many gold investors were trying, with all their might, to call a double bottom. Now that the double bottom is out of the picture I wonder what will be their next reason for a bottom? Compare the price action from the rally off the 2008 crash low where most of the monthly bars made a higher high to our current bear market, that is showing us the exact opposite. Each monthly bar is making a lower low except where there is a consolidation pattern.

Lets look at the weekly linear scale chart for the HUI which shows our Diamond consolidation pattern having made an attempt this week at a backtest. A move below last weeks bar will more than likely tell us the backtest is over and done with as it will setup a new lower low for the move.

This next chart is a monthly linear scale chart that shows the total history for the HUI. The month of December still has alot of trading left but you can see on the chart below that the major bottom uptrend rail has been broken. I’m in awe of how this bear market if unfolding when I look at this chart. Many think we should be playing with the stock market stocks instead of shorting the precious metal stocks. Folks, this chart shows you why we have been shorting the precious metals stocks instead for the most part. You just don’t find moves like this everyday in any of markets and to recognize something on this scale, early enough, can change your world.

Lets take a look at gold from several different perspectives. The first chart I would like to show you is a daily chart with fanlines on it. Normally when a fanline is broken you will get a backtest to the underside, in this case. When the third fanline is broken to the downside is when you the pattern is complete. I have added a fourth fanline that came at the previous low at 1210. The heavy black dashed trendline is actually a neckline that is part of this complex consolidation pattern. Note the last two days of trading where the price action is backtesting the heavy dashed trendline or Neckline. This is a critical test taking place right now on gold.

Below is a daily chart for gold that shows the H&S consolidation pattern in more detail. Keep in mind this H&S consolidation patterns is just part of the bigger and more complex Diamond.

This next daily chart for gold shows the complex blue diamond with the many smaller chart patterns that make up this pattern. You can see the smaller blue dashed triangle that started this Diamond followed by smaller H&S tops at each reversal points within the Diamond. You can see the bigger H&S pattern that we looked at on the chart above. I can also make a case for a symmetrical triangle that would start at the June low. All those lesser chart patterns equals a big Diamond consolidation pattern.

Below is the 6 point Diamond consolidation, as a stand alone consolidation pattern, without all the other smaller patterns.

Lets check on the progress of the potential big H&S top that has yet to breakdown. We are getting some important information tho as it’s bouncing off the potential neckline. I know it cause some pain but it tells us this neckline is hot and if it is broken to the downside it will signal the completion of this possible very large H&S top.

Lets look at one more long term monthly linear chart for gold that shows the parabolic bull market which gold enjoyed for over ten years. If this chart doesn’t make an impression on you, that gold’s bull market is over, there is no other chart I can show you that can change your mind. This is it. A break below the June low will be the frosting on the cake.

As I have stated many times in the past, the big money will be made by those that can control their emotions, and not jump ship every time a wave hits. This is an epic decline taking place in the precious metals stocks that you just don’t see everyday in any market. If one can play this move correctly it can be a game changer in ones life but it’s going to take discipline that most don’t have. All I can do is show you the Chartology and the rest is up to you. All the best…Rambus

Tonight I would like to show you some HUI to gold ratio charts that could give us a place to look for the ultimate low for the big cap precious metals stocks. So far these charts have been playing out for over five years. The first chart is a 5 year daily line chart that shows the blue 5 point triangle reversal pattern. That 5 point blue triangle reversal pattern has led the big cap PM stocks lower forming one consolation pattern after another. As this is a line chart the low for the 2008 crash low was .20. I’ve shown you many times, that when you have an important support and resistance zone or rail, a consolidation pattern can form above, below or right on that important area. Note the red bearish falling wedge halfway pattern that has formed just below the all important support and resistance rail on the bottom right hand side of the chart. Also note the breakout that just occurred that is signaling the next impulse leg down is just beginning. The two red patterns are halfway consolidation patterns that I’ll show you how they are measured in a bit.

This next  chart is a long term weekly look that shows the entire bull and bear cycle that began at the end of 2000 with that infamous 5 point blue triangle reversal pattern.  As you can see this ratio chart has almost completed a round trip. Notice the massive blue 5 point triangle reversal pattern that called the end of the PM stocks outperforming gold. It was and still is hard to believe, that that was the end of the out performance of the big cap PM stocks to gold. You can see the 2008 crash that occurred when the massive 5 point triangle broke down. Note the red 5 point triangle reversal pattern, that I showed you on the chart above, that formed when the rally off the 2008 crash low was finished. It has been all downhill even when gold went to its all time high in September of 2011 at 1920. I’ve been looking for the .13 low, that started the bull market back in 2000, to be hit at some point in time. That seems like the most logical area for the HUI to bottom but I will show you why I think this ratio maybe going lower before it’s all said and done. First the weekly chart.

This last look for the HUI to gold ratio chart is a 5 year daily line chart that shows the measured moves since the breakout of the 5 point triangle reversal pattern. So far the measured moves down have been deadly accurate as measured by the red rectangles. As you can see the red triangle was a halfway pattern as measured by the two red rectangles with one on top and one below. The lower red rectangle measured to the beginning of the blue bearish expanding rising wedge, red #2,  that is the start of the next impulse leg down that is slightly longer than the first one. Now we are going to measure the second impulse leg down as measured from the blue bearish expanding rising wedge. The first half of this measured move is the upper blue rectangle. As you can see we just broke out from the red bearish falling wedge that shows the measured move, as shown by the lower blue rectangle, has a price objective down to .08 with a time objective around May of 2014. This could very well be the annihilation phase that Sir Plunger has been describing. All the best…Rambus

It’s been several months since we took an indepth look at some of the more important currencies in the world. In this Weekend Report I would like to show you some important developments that have taken place that could be signalling a stronger US dollar maybe in the cards. Most of the currencies have been in a prolonged topping or consolidation pattern which some broke down awhile ago and some are still consolidating.

Lets start with the CAD, Canadian Dollar that has been showing a beautiful H&S top formation that broke down in May and has been in backtest mode ever since. The backtest took on the formation of a small red bear flag that finally broke through the bottom rail this past week. The last time I posted this chart I said it was a mirror image of the HUI weekly H&S top, complete with the neckline symmetry rail, that showed us the height for the right shoulder. Like the HUI this is a very large topping pattern that is going to be in play for sometime to come.

The XAD, Australian dollar, formed a very nice five point triangle reversal pattern that broke out to the downside in May of this year. Our first big clue that the XAD would break down was the completion of the red 7 point rectangle that formed out toward the apex of the 5 point triangle reversal pattern. As you can see on the chart below, even though you have a nice clean breakout, the backtesting process can take some valuable time to complete. This can be frustrating to live through but it doesn’t change the outcome of what that very large triangle reversal pattern represents. Which is a big top.

Before we move on lets look at the daily chart for the XAD that shows the beautiful 7 point rectangle reversal pattern. Also note the little H&S that broke out this week signalling the little counter trend rally is now reversing course.

The XBP, British Pound, looks like it’s morphing into a bigger triangle. The blue dashed trendlines shows the original triangle that had a nice clean breakout through the bottom rail and then the backtest at 158. Once the price action traded back above the bottom blue dashed rail that negated the breakout. As you can see the price action has been chopping very tightly within the apex of the original blue dashed triangle, and then broke out to the topside. The red circles shows you where I would expect the top blue solid rail to be place if this triangle is morphing into a bigger triangle. I showed you this in regards to the Yen awhile back.

While we’re on the subject of morphing triangles let look at the Yen’s morphing triangle and see how it turned out. First, the original triangle on the daily chart. Note the big breakout gap and the two backtests to the bottom rail that looked perfect.

This next chart for the Yen shows how I used the red circles to expand the original blue dashed triangle. It’s not a perfect science but normally when you readjust the bottom rail many times the top rail will need to be adjusted by the same amount. It’s a symmetry thing. As you can see the top solid rail only morphed about half of the red circle for its high and then the price action reversed back down breaking through the new solid blue rail signalling the triangle was complete. Note the last two long bars that formed at the apex of the new solid blue triangle. That was the final gasp before the triangle finally broke down.

Lets look at a few more charts for the Yen as gold seems to be following the Yen closer than the euro. The Yen made a beautiful H&S top before it broke down that led to a near vertical move lower. Our morphing triangle on the daily chart above shows you why that triangle is so important to the overall big picture. Note the near vertical move down from the breakout of the H&S top into the Blue Triangle. Many times how a move takes place going into a consolidation pattern, a similar move will occur when the price action exits the consolidation pattern. As you can see the Yen has now completed its third week in breakout mode in a near vertical move. I’m viewing the blue triangle as a halfway pattern until something tells me differently. This just maybe a coincidence but silver has now traded three weeks below its Diamond consolidation pattern.

Below is a comparison chart where I’ve overlaid gold on top of the Yen. As you can see we are getting a better correlation then if you overlaid gold on top of the euro.

On the chart below I’ve overlaid gold on top of the euro that shows a very strong negative correlation starting in September of this year. Up until that point they moved fairly close together.

The NZD, New Zealand Dollar, rallied up to the top blue rail of a now possible 5 point triangle reversal pattern. The pattern won’t be complete until the price action touches the bottom rail again. So the pieces of the puzzle are still being put in place that will eventually confirm to us what kind of triangle it will be.

The Swiss Franc was one of the first currencies to top out and in a big way. It went parabolic into its ultimate peak before it reversed symmetry all the way back down to the black dashed support and resistance rail at 100. Since hitting the big support and resistance rail at 100 the Swiss Franc has been building out what looks like a huge blue bear flag. It still has alot of work to do but as long as the price action stays below the top rail it is what it is.

Lets now look at the euro that has been one of the stronger currencies out there. This daily chart shows how the euro broke down below the bottom rail of a bearish rising wedge. It’s not uncommon, with a wedge pattern, that the price action can rally for a prolonged period of time just below the bottom rail of the rising wedge. As you can see it has been testing the underside of the bottom blue rail for close to a month now. A close back inside the rising wedge will negate this pattern. So far the bottom blue rail has held resistance.

This two year daily chart for the euro shows a possible 6 point bearish expanding rising wedge that is still a work in progress. This pattern seems the most logical one to me but until it’s complete I have to remain neutral on the euro.

The long term monthly chart for the euro shows a possible red bearish rising wedge forming within the much bigger blue falling wedge.

The last chart I would like to show you is the long term monthly chart for the US dollar that is showing it trading between two converging rails. The month of October showed the US dollar cracking below the thin support and resistance rail for just a short period of time, before it managed to climb back above it, putting the US dollar back to neutral. There are a lot of short term charts for the US dollar I could show you but for me this is the most important chart to focus on as there is less noise to contend with.

As a whole the currencies seem to be topping out in the big picture. Some have already completed their breakouts and backtests while others are still trading within their topping patterns. The US dollar seems to marking time just chopping around not doing much of anything at the moment. At some point the trend will reassert itself and there will be little doubt as to which way the US dollar is headed. In the mean time we just need to have some patience and wait for some further developments in the other currencies to help guide us along. All the best…Rambus

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Editors Note :

A Message from From Catherine Austin Fits :

Thank You Rambus

https://solari.com/blog/thanks-rambus/

Since Sir Fullgoldcrown, Sir Audept and myself created and opened Rambus Chartology two short years ago , I’m in awe of the number and quality of subscribers we have. We started out with no preconceived notion on what to expect and nothing more than a desire to help Precious Metals Enthusiasts navigate these treacherous markets as well as Teach the art and science of a Technical Analytical Technique we call Chartology. We didn’t know if we would get even one subscriber but for us it was a labor of love that we enjoyed. We now have subscribers from every corner of the world and many high profile folks that I couldn’t even have imagined would be interested in our little website.

My wife and I had the pleasure of having dinner Tuesday night with one of our subscribers, Catherine Austin Fitts. She was on her way home to Tennesee from California and wanted to know if we could meet for dinner here in the Ozarks. I was flabbergasted and said of course. We had a great meal at Gaston’s Resort and Restaurant on the White river, which is one of the best trout fishing rivers in the country. We ended up closing the restaurant down as time just flew by so fast. What a wonderful lady . We were very comfortable in her presence as she is very down home and incredibly well spoken

It’s not everyday you get to talk to someone who has been on the inside of Washington politics and see’s what is really going on. All I can say is that she’s on our side and is trying to make a difference as the video below will show.

Catherine Is President of Solari, Inc., the publisher of The Solari Report, managing member of Solari Investment Advisory Services, LLC., and managing member of Sea Lane Advisory Services, LLC

Her Biography is really something

http://www.dunwalke.com/catherine_austin_fitts.htm

Here is just one example of her work…a compelling interview entitled ” The Looting Of America”

http://youtu.be/gP6rny-E1Cw

and a picture we will cherish as a memory of a special nite with a special lady

On this Thanksgiving 2013 I am thankful for each and every member of our website

Thanks for the great time Catherine and I’m sure we’ll meet again down the road in the not to distant future. All the best…Dave

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THANK YOU RAMBUS…from Catherine Austin Fits

https://solari.com/blog/thanks-rambus/

In this Weekend Report I’m going to show you the Chartology of gold, from my perspective, for the last 17 years or so. As you know I don’t pay lip service to the cycle guys, Elliot Waver’s or the many different disciplines that folks use to analyze the markets. My goal is to give you an unbiased look at the markets strictly from a Chartology perspective that is unique for our site.

In this look at gold I’m going to use several different concepts that I’ve shown you in the past to try to give you a feel of where we maybe headed. We’re going to look at neckline symmetry rails, neckline extension rails, reverse symmetry and just your everyday support and resistance points on a chart. I hope to paint a fairly accurate picture of where the gold market may find an important low based on the charting concepts listed above.

1…NECKLINE EXTENTIONS

Before we look at gold I want to show you some of these charting concepts so you will have a better understanding of what I’m showing when we get to gold. The first thing I would like to show you is a neckline extension rail. Many times when a neckline is broken you will get an immediate backtest and then the move will take place. There is a saying I uses that goes like this, a neckline never dies it just slowly fades away. By that I mean you can extend the neckline way out in time and it can still be active even though the original move has completed and the price objective met.

AEM was one of the first big cap precious metals stocks to form its high and breakdown while the rest were still building out their topping patterns. There are three H&S tops on this weekly chart below but we’re just interested in the middle one that formed back in 2010 – 2011. After reaching its price objective down at 33 or so it then had a counter trend rally that took the price action all the way up to the old neckline that I’ve labeled, Neckline Extension Rail. As you can see AEM tried for several months to breakout above that neckline extension rail but failed. That failure created the head portion of another H&S top which reached its price objective down at the 25.62 area where its currently trying to form a blue falling wedge.

The very long term monthly chart for AEM shows our Neckline extension rail at the top of the chart with a much bigger one towards the bottom that could offer some support at the 12.79 area. Keep in mind this was roughly an $85 stock back in 2010. If one understood the Chartology of this stock he would have sold out at least when the H&S top broke down. I wonder how many PM investors are still holding on to this stock waiting for it to come back? I don’t want to say 1980 deja vu all over again but the point is one never knows when the long term move has been completed. Maybe AEM will end up going much higher than 85 in the very long run but if one has been holding this stock for the last several years its been a painful ride no matter how you want to spin it.

2…NECKLINE SYMMETRY SHOULDER LINES

Lets look at some neckline symmetry rails that are just a parallel line taken off the neckline and moved to the left shoulder high or low when you think there is a possibility of a H&S forming. It’s not a perfect science but it does give you a place to look for a high or low for a right shoulder. It is amazing tho how many times this works out. The massive H&S top on GDX shows a beautiful neckline symmetry rail that nailed the top for the right shoulder. When I see something like that it increases my confidence level that I’m on the right track.

NEM formed two very nice neckline symmetry rails, one back in the 2008 H&S top and one in our current H&S top. You can also see the reverse symmetry coming back down.

NGD had a nice neckline symmetry rail that showed the high on the right shoulder. As you can see each shoulder was made up of individual chart patterns which is common.

3…REVERSE SYMMETRY

Now lets look at probably the prettiest reverse symmetry chart I could find. Most of the precious metals stocks are reversing symmetry down vs how they went up during the rally off the 2008 low. If I had a hall of fame for some of these charts this chart for ANV would go in under the reverse symmetry category. Again like AEM this was a $47 dollar stock not that long ago. As fear is a more powerful emotion than greed you can see how this stock has come down a bit faster than it went up. What makes this chart so beautiful is the blue reverse symmetry triangles that are forming in the exact same location on each side of the rally and decline phases. As you can see the blue triangle broke out last week and now is headed down to the 2008 crash lows.

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With these three basic concepts in Chartology lets now apply them to the long term look at gold and see what they show us. The first chart for gold is a 17 year log scale chart with no annotations on it. I just want to show you how we will make this chart come alive by adding a few trendlines, in the right spots, to show what may take place going forward. When looking at this blank chart just notice that during the bull market years how gold made higher highs and higher lows all the way up except for the 2008 crash low that just slowed down the bull market for a bit. Note the price action since the high was put in in 2011. There is a series of lower highs and lower lows which by definition is a downtrend.

With this next chart for gold we’ll add a top and bottom trendline that encompasses the bull market. These two trendlines form an expanding rising wedge. Note how many times the top rail has been touched. The red circle shows a very important aspect to this chart. What it shows is the break down form gold’s bull market expanding uptrend channel complete with the backtest. Remember we are constantly looking for clues. The backtest was a very important clue as it shows the bottom rail to be HOT.

This next chart I will add a neckline extension rail made off the 2008 H&S consolidation pattern that now starts bringing this chart to life. On the chart above you can see how gold broke through the bottom rail of the expanding uptrend channel. The reason it bounced from that low for the backtest is because of the 2008 neckline extension rail.

Before we move on I want to show you the 2008 H&S consolidation pattern in all its glory that I had a feeling would come back in play at some point in the future. When you look at the monthly chart above the 2008 H&S consolidation pattern  doesn’t look like anything special but looking at it up close and personal it gives a whole new meaning to how beautiful Chartology can be sometimes. Of all the H&S patterns I’ve charted through the years this one on gold has to be one of the most symmetrical ones I’ve ever had the privilege to chart. They say beauty is in the eye of the beholder. Some of you will look at this next chart and say what is so special? We touched on neckline symmetry rails in the first part of the article on the GDX and NEM. If you can take just five minutes to study this chart below you will see the beautiful colored symmetry rails and how they played out on each side of the H&S. I wrote an explanation on how to read the H&S consolidation pattern on the chart. Just divide the H&S into, from the head straight up to the neckline where you will see two black arrows. The colored neckline symmetry rails are all the exact same angle. Follow the colored arrows down on the left side and then do the same thing on the right side chart. You will see each side of the H&S consolidation pattern, the lows and highs correspond to each other. Another very important feature on this chart is the big fat neckline. Note the first breakout and backtest that was spot on. Gold then had a good rally that stalled out and the reaction found support again on the big fat neckline at 1040. That is the point that led to gold’s final major rally phase up to 1920, its bull market high. One last point on this chart. Follow the top brown symmetry rail all the way from the left side of the chart to the right side of the chart. Note how the smaller H&S bottom that formed on the big fat neckline, as a big backtest. The left and right shoulders formed on the brown NL symmetry rail. Watching this unfold in real time was quite exciting as I always had a place to look for support which always showed up exactly when it needed to. Anyway, from my perspective I find the symmetry to be quite amazing which is why I’m so attracted to the Chartology of the markets.

This next chart for gold shows how I’ve extended the 2008 neckline to the present day. I will now show you how the neckline symmetry rails are working in regards to our current situation. I showed you earlier on the GDX and NEM how the neckline symmetry rails showed the top for the right shoulder. We are now reaching a most critical point in regards to where gold maybe heading over the intermediate term. If the neckline extension rail, made off the 2008 H&S consolidation pattern, extended out to our current time frame, maybe showing us a very large H&S top in play. What the neckline symmetry rail is showing us is a possible high for a right shoulder. What is interesting is that the neckline symmetry rail, that shows the bottom for the left and right shoulders on the 2008 H&S consolidation pattern, is also the same angle as our current H&S symmetry rail that is showing a high for our current and possible, much bigger H&S top left and right shoulders. All the neckline symmetry rails are the exact same angle as the 2008 big fat neckline.

This last chart for gold puts all the pieces of the puzzle together using the Chartology concepts we discussed earlier in the article. The brown shaded area shows where we might see an important low for gold based on the price objective for the H&S top and the previous low at 680. Stocks usually come down faster than they go up so by looking at the reverse symmetry down it could take anywhere from 6 months to a year before we see the bottom but that is only a guess at this point. I also expect a small consolidation pattern to form about halfway down from the breakout of the neckline to the brown shaded area low.

This is how I see things playing out over the intermediate term. Right now the most important area to focus on is the neckline extension rail made off the 2008 H&S consolidation pattern that comes in at 1200. I will be watching with great interest how we inter act with that 1200 neckline. That is the whole ball game right there. I would expect an initial hit at 1200 with a small rally followed by a break of the 1200 area followed by a brief backtest to the underside and then the fall away. That would be the perfect Chartology way to break 1200 and the possible big neckline that would complete a massive H&S top similar to the HUI and the rest of the Precious metals stock indexes. We now have something concrete to watch and pay close attention to. The market will tell us of her intentions, we just have to pay attention to what she is saying. All the best…Rambus