In this Weekend Report I would like to look at the Chartology of the precious metals complex as this is either a consolation phase or as some think a bottoming formation is building out that will lead to the next bull market. In order to grasp what is really going on we need to look at all the possibilities and try to gain some perspective on which course of action the precious metals complex is likely to move in the short to intermediate time frame up or down.

The first chart I would like to show you is what I call my bull or bear chart. Many chartists are looking at the inverse H&S bottom that actually started to form back in April of this year, left shoulder. The head was formed during the late June low followed by the ten week rally to the September high around the 1435 area. As you can see there are two black necklines labeled #1 and #2 that shows a possible double inverse H&S bottom. In order to keep the symmetry alive gold would need to decline down toward the 1250 area where it could then form the second right shoulder. To confirm an inverse H&S bottom is in place gold would have to takeout the bigger neckline #2  around the 1400. This would be the bullish case for gold. The bearish argument for gold is that it is forming a H&S consolidation pattern as shown by the blue annotations. The flash rally that took everyone by surprise made the right shoulder high which quickly reversed direction. So at this point we have two inconclusive patterns to work with.

As I will show you in the following charts I believe the blue H&S consolidation pattern will be the correct pattern to follow. If gold rallied up through the bigger neckline #2 then I will have to reassess the situation. The 60 minute chart for GLD shows all the chart patterns that have developed since the late June low. The first chart pattern to note is the black bearish rising wedge that had built a smaller red bullish expanding falling wedge as a halfway pattern which created the left shoulder. The breakout from the red expanding falling wedge led to the high for this move which is the head portions of the double H&S top. Note the small H&S top that reversed that 10 week rally labeled neckline #1. Once the smaller neckline #1 was broken to the downside that led to the bottom of the bigger H&S neckline #2 where we got the flash rally that formed the right shoulder. Note the neckline symmetry rail that was made off of the smaller neckline #1 that gave us a good place to possibly look for a bounce for a bigger H&S top which turned out to be the case with the placement of neckline #2. A neckline symmetry rail is just a parallel trendline made off the original neckline. It doesn’t work all the time but it does give you a rough place to look for a second neckline which happens quite a bit.

Let look at a daily chart for gold that puts the 60 minute H&S consolidation pattern into perspective. As you can see the price action is trading right in the middle of both necklines in no man’s land.

This next chart shows the big 20 month rectangle that gold broke out from back in April of this year. That was a major nail in the coffin for the bull case as gold should have never broken that critical bottom rail of the 20 month rectangle. That confirmed the bear market for me.

Lets look at one more chart for gold that shows a very long term monthly view going back 20 years. This chart makes it painfully clear if you’re bullish on gold that there is a lot of work to do to repair all the damage that has been done since the unbalance double top was put in. First note the 10 month ema that held support for most of gold’s bull market years and was rising. Since the unbalanced double top was put in note how it’s now acting as resistance on any rally and is falling. The brown shade support and resistance zones I have added that shows the previous tops that were made on the way up should now act as initial support on the way down. If gold takes out the 3rd brown shaded support and resistance zone there will be little in the way of support until it trades down to the 4th support and resistance zone around the 1000 area. I often write about reverse symmetry which means how a stock goes up, especially in a strong move, will reverse that move in similar fashion on the way down. As you can see that is exactly what gold is doing.

Lets now focus our attention to silver by looking at the 60 minute chart that shows it too has a small H&S top  in place with a possible bigger H&S pattern developing right now. There have been two backtests to the smaller neckline around the 22.25 area. Note the flash rally that took the price up to the smaller neckline and has created the right shoulder of the bigger H&S pattern. As you can see the bigger H&S pattern is strongly slanted but the neckline symmetry rail suggested that the right shoulder high would come in around the smaller H&S neckline. The price action has been crawling along the bottom neckline for a week or so which if it’s broken to the downside the bigger H&S pattern would have a price objective down to the previous low at 17.82.

The daily look at silver shows how the flash rally ran into resistance at the neckline.

The weekly chart for silver shows its big 20 month rectangle that broke down in April of this year right at the same time gold broke below its own bottom rail. The blue arrows shows why the bottom blue rail of the rectangle is such a critical resistance zone. It’s a 38% retrace of the last reversal point in the big rectangle at reversal point #6. The brown shaded area shows how silver came close to actually backtesting the bottom rail of the 20 month rectangle. Again that bottom rail is critical resistance so if silver can ever overcome that blue rail that would be a big deal for the bulls but until they can over come that all important trendline defensive action is the best policy.

This next chart for silver shows a possible consolidation area that maybe forming at this time. It’s too early to tell yet buy it makes sense from a Chartology perspective. As you can see silver had a big decline starting at the 6th reversal point in the blue rectangle at the 35.50 area all the way down to the 17.80 June low. That was a very big decline and now it needs time to consolidate that move  regardless if silver is still going to move lower.  Right now silver is trading right in the center of a possible consolidation pattern as shown by the thin red dashed center rail.

Lets look at a weekly chart for SLV that shows a slightly different consolidation  pattern vs the 20 month rectangle. Here you can see a blue bearish falling wedge that has four reversal points with a big breakout gap and a completed backtest to the bottom blue rail. Again, you can see how SLV can trade sideways for many months before a definitive breakout would occur. These types of trading ranges can offer up some good profit potential if one can identify them early enough.

I would like to finish up this Weekend Report by looking at some of the precious metals stock indexes that are showing two different patterns at the moment. LIke I showed you on the short term charts for gold and silver they both have formed H&S consolidation patterns. The first pattern I would like to show you on the HUI is its own possible H&S consolidation pattern. Here you can see the flash rally formed the right shoulder and the HUI is now testing the possible neckline. Just think of the neckline for the HUI as positive above and below negative. Of the four precious metals stock indexes I follow the HUI is showing the most strength as the other ones have already broken down.

The 2 hour line chart shows the other chart pattern the PM stock indexes are all making is a bearish expanding rising wedge with the H&S pattern as part of the bigger pattern. As you can see the bottom rail is very hot as its been tested many times. We will know soon enough who is in control the bulls or the bears by what happens around this very important trendline.

As I stated early the HUI has been the strongest PM index as it’s still trading above the bottom rail. Lets look at a few more PM indexes that are showing weakness and are trading below that all important rail. First lets look at the GDX that shows it already breaking below the bottom rail complete with a backtest. The bottom blue rail is now your line in the sand.

The 2 hour line chart for the XAU shows a breakout and backtest.

Even though there wasn’t a lot of movement this week in the precious metals stock indexes there was some very important changes being made namely the breakout and backtest of the bottom blue rails of the bearish expanding rising wedges. So far this is how we want to see the breakout occur. The important thing to keep in mind is that we don’t want to see the price action trading back above the bottom blue rail if one is short. If one is bullish that is what one wants to see. The main thing is we have a line in the sand in which to operate.

The GDXJ is showing a double H&S top in place with the all important backtest taking place right now.

The long term daily chart for GDM shows how this potential topping area started out as a small double top which is the head portion of the H&S consolidation pattern. The brown shaded area shows why the double top head formed where it did as it was previous resistance.

I want to leave you with one last long term chart for the HUI that shows the massive H&S top we’ve been following and our current blue expanding rising wedge pattern in linear scale. We have two price objectives as shown on the chart below. The first one is the price objective of the big H&S topping pattern that measures down to the 106 area as measured by the blue arrows. The second price target is based on our bearish expanding rising wedge as being a halfway pattern. This price target is measured from the breakout of the big H&S top to the first reversal point in the blue bearish rising wedge. Add that measurement to the breakout of the blue expanding rising wedge to get your price objective down to the 65 area, red arrows.

I know it seems impossible at this time for such a low price objective but when I look under the hood of the precious metals stock indexes there is still a lot of room to move lower for many of the big cap stocks. Until something changes this scenario this is what the charts are telling me. Having capital when the PM complex is finally finished going down is going to be key in taking advantage of the bargains that will be there for the taking. That’s the bottom line. This week I’ll update some of the big cap precious metals stocks again as that’s where the real story lies.  All the best…Rambus

Today’s price action gave us a very important clue that a major shift is brewing in regards to the precious metals complex and most likely commodities as well. These kinds of days don’t come around very often but when you see such a massive move during the day time trading hours you need to pay attention. I know today’s price action may be very frustrating for some of you but It’s all part of the game we choose to play. It’s days like today that separate the winners from the losers. This is the point where many will throw up their hands and say ” I quit this is just to hard.” But in all honesty this is the point where you can grow as an investor because you have survived one of the best shots the markets can throw at you. Now it’s all about analyzing what happened today and moving forward.

Today we got the biggest clue we could ask for. The almighty dollar finally gave us the answer we’ve been waiting for. As you know I’ve been bullish on the dollar for quite sometime waiting for it to show its hand. Today was the day. Early on in its development I showed the potential for a Diamond pattern that I believed would breakout to the upside. Today we got the breakout but it was to the downside. I always talk about the number of reversal points a pattern makes because it can tell us if it’s going to be a consolidation pattern or a reversal pattern. An even number of reversal points equals a consolidation pattern that will breakout in the direction of the move leading into the consolidation pattern. An odd number of reversal points tells us the congestion area is going to be a reversal pattern. As you can see on the chart below the Diamond has 11 reversal points making it a reversal pattern to the downside. Also note the big long daily bar today. This is what a breakout looks like. Today’s breakout move in the US dollar is a  pivotal event that is going to change things at least for the intermediate term. After all these months of waiting for the dollar to finally show its hand today was the day. It’s now possible we could see a backtest to the underside of the blue diamond around the 80.80 area before it moves down in earnest.

The breakout in the dollar gives us perspective of where we are in the scheme of things which is important to know. This next chart is a combo chart that has the US dollar on top and gold on the bottom. If you recall our diamond pattern originally started out a an expanding triangle, reversal points one through nine. The gold chart shows it backtesting the bottom rail of the rising wedge pattern which so far is holding resistance. If gold can manage to close above that bottom rail that would be another very big clue that gold has some legs and could rally further. The bottom blue rail of the 20 month rectangle, at 1530, is by far the strongest resistance point that gold will have to overcome to really start a new major leg higher.

The blue diamond on the longer term look with the 50 and 200 dma crossovers. So far the 50 dma hasn’t crossed below the 200 dma yet but it’s now getting close.

This next long term combo chart for the US dollar and gold shows the dollar breaking below the rounding bottom that has been in place for many years. This is a big deal.  Again you can see how the 1530 area shows up as resistance for gold.

Let me show you one more chart for the US dollar that I don’t believe I’ve shown you before. As this rising wedge formed below the previous top it only needed an even number of reversal points to be a consolidation pattern. As you can see it clearly broke below the bottom rail today signaling the rising wedge is a bearish rising wedge. The price objective of a rising wedge, when it has broken to the downside, is where the rising wedge first started to form. In this case the low around the 73 area would be the price objective.

Below is a daily gold chart that looked very negative up until 1 pm today. Now I would have to rate it as neutral until it can trade above the neckline and the bottom rail of the rising wedge.

Lets take a look at gold that shows the rally today stopped right at our overhead resistance at the 1360 area. A move back inside the rising flag would be constructive.

About a month ago we tried our hand at going long the precious metals sector for the third time in the last year or so. We loaded up on a bunch of precious metals stocks and the long 3 X gold and silver eft’s. Below is the original chart I posted at the time that showed how a possible inverse H&S may form based on the Chartology of the chart. I have not touched this chart since I posted it in the, “Another Brick in the Wall post”.

http://rambus1.com/?p=15900

Today’s price action bounce off of the 1300 area which was critical for this potential scenario to play out. It looked like earlier this morning that gold was cracking the bottom neckline symmetry rail. By 1:15 it was obvious that the 1300 held as support. As you can see gold is now trading right into overhead resistance backtesting the bottom rail of the uptrend channel. I need to tweak the neckline down just a tad as gold failed to reach my price objective up to the 1455 area. I will also have to tweak the neckline symmetry rail just a tad as it runs parallel to the neckline.

Below is a weekly chart that shows the potential inverse H&S bottom that still has alot of work to do yet before we can say it’s complete. Today’s bounce at 1300 goes along way in the development of the possible H&S bottom.

Based on the long term look at where support and resistance resides I built this chart that shows how gold could move higher. This would be a perfect scenario chart where gold would hit overhead resistance, fall back to support, rally back up to the next resistance rail, backing filling all the way up. Gold has a lot of work to do but if the June low is THE LOW this is how I would expect it to move. Once gold can trade above the top blue rail of the bullish expanding falling wedge that is when gold will be in the clear and can run to new highs. Right now gold is trading right in the middle of the possible bullish expanding falling wedge consolidation pattern.

Tomorrow we’ll look at the precious metals stocks and indexes. Today’s price action came right at the last critical moment to preserve some of the inverse H&S bases that had been forming since April in some cases. They aren’t some of the prettiest bases I’ve ever seen but they could fit the bill with just a little more work to the upside. Keep in mind that the precious metals complex is still consolidating or bottoming and today’s price action is very miniscule when one looks at the longer term monthly chart. Bases take time to build and I would like nothing better than for the precious metals stocks to be forming long lasting bottoms in here. We just have to follow the price action and see where it leads us. We should know more in the next few days if some of these bases are really going to mature and some sort of bottom is in place if even for the intermediate term. Stay strong…Rambus

Tonight I would like to show you some charts of what this nearly 10 week counter trend rally looks like compared to this downtrend that has been in place since the highs made one year ago. I want to start with a one year two month chart for the HUI that starts with the right shoulder top, for the massive H&S topping pattern, Big S. This chart may look a little busy but if you start at the top left side corner, Big S, you will see the downtrend channel that has been in place for one year now and shows all the consolidation patterns that have formed during this time. Looking at the top left side of the chart the first chart pattern you see is the black bearish falling wedge which at the time I thought would be a bullish falling wedge. Note the two day hard break below the bottom black rail of the bearish falling wedge. That was my cue that the black 5 point falling wedge was a reversal pattern to the downside. The red arrow and the purple vertical dashed line shows you where we took our first position in DUST, which is a 3 X short the precious metals stocks index, on December 3rd, 2012. As you can see we bought the backtest to the underside of the black falling wedge reversal pattern. We slowly kept building our short position as the downtrend unfolded. Take a moment and look at the downtrend channel starting at the top, following the price action bar by bar all the way down to the June low. You will see, for the almost one year decline, there wasn’t one time where the HUI made a higher high and higher low until the June low this year. So by following the price action we never had to sell our short position and just kept riding the downtrend. Notice all the small red lesser consolidation patterns that formed during the one year decline. They don’t look like much looking back but when you’re riding these little patterns out in real time it can make one insecure about the big picture and question if you are still on the right side of the market. I can always tell when subscribers start to get grouchy that the consolidation area is starting to get to them.

I now want to show the lower part of the daily chart that shows our current possible bearish expanding rising wedge. This pattern shows a different character than all the price action above. As you can see this blue pattern has made a series of higher lows and higher highs. The $64,000 question is, is this a bottom reversal pattern or a consolidation pattern that will show the way lower when it’s complete ? Right now the price action, over the last year, is trapped in a parallel downtrend channel. Notice the placement of the small double top at the top of the blue bearish rising expanding wedge and the top rail of the downtrend channel.  Is it a coincidence that the small double top formed where it did? Lets zero in on the latest price action that shows the black dashed down slopping  trendline that runs through the center of the blue pattern that is labeled a S&R rail, (Support and Resistance rail). Below it is resistance and above is support. You can see yesterday’s price action gapped below that S&R rail with today’s price action testing the S&R rail from below. You can also see the 50 dma comes in right here and now. We are going to have an interesting couple of days ahead of us as we watch how the price action interacts with the black dashed trendline and the 50 dma.

Lets look at the same area without the downtrend channel trendlines in place. As you can see it is obvious that we are in the biggest congestion area in more than a year. We won’t have confirmation of a continued down trend until the price action breaks below the bottom blue rail. The HUI is now trying to backtest the underside of the little red triangle that formed just below the double top.

Lets take a look at the other possible scenario that many are looking at which is the inverse H&S bottom. There is a certain symmetry taking place that has two shoulders on the left side of the head and with today’s price action we are now in an area where a second right shoulder could form creating the inverse H&S bottom. I’ve also put on two necklines that connect each left and right shoulders. Yesterday the price action gapped below the lower neckline with a backtest in progress today. In order for the inverse H&S bottom to have a chance the first order of business is for the HUI to break above the lower neckline.

Lets take a look at the daily line chart that show the potential symmetry taking place on each side of the head. Even though this inverse H&S bottom is not my favorite scenario right now I still have to keep an open mind for any possibility.

Lets put our one year downtrend into perspective by showing the massive H&S top and the price action that I showed you on the charts above that is the downtrend off of the right shoulder top. The first thing to note is this chart is in linear scale and shows the massive H&S top that has a price objective down to the 106 area. If our current blue bearish expanding rising wedge plays out to the downside we can expect a similar move that led into the pattern to take place as the price action leaves the pattern. I know it seems impossible at this time for such a move to take place but that is what will most likely happen if the bearish expanding rising wedge breaks down.

Looking at the same chart in log scale we get quite a bit higher price target for the HUI H&S top that comes in at 215 or close to the bottom of the blue bearish expanding rising wedge. Until something proves me wrong I’m looking at our current blue bearish expanding rising wedge as a possible halfway pattern to the downside with a price objective that would come in around the 112 area.

Now I want to look at some big cap precious metals stocks to see how much damage as been done during the last 10 week rally. Lets look at the longer term charts as they are much more important than the daily’s. Lets start with a look at AEM that shows the price action gapped below the bottom S&R rail in April of this year. AEM has made several attempts to rally back to the underside of the S&R rail as a backtest but so far without any luck. Note the most recent price action that shows the small double bottom that led to the 10 week rally that should now be offering support. As you can see the double bottom hump has given way this week. If AEM is going to form an inverse H&S Bottom it needs to find some support in this general area. Also note the nice big H&S top that broke down almost two years ago and the backtest to the neckline extension rail that  halted its advance.

The monthly chart shows 20 years of price action. Note the last two bars on the right side of the chart that looks more like a backtest to me than a reversal pattern to the upside.

Looking at the long term monthly chart for ASA we can see it broke below two important trendlines, the bottom blue rail of the expanding downtrend channel and the bottom rail of the black uptrend channel. As you can see the last 10 weeks or so have been a backtest move to the bottom rail of the blue expanding downtrend channel. This is a critical test taking place right now. So far it’s failing the test.

The AU monthly chart shows the beautiful reverse symmetry that took place during its one year decline that slammed into the 2008 crash low and has bounced. We’ll see if this is a dead cat bounce or something more important by the way the price action interacts with the 2008 crash low.

The last 10 week rally in BVN shows just some chopping action around the lower Support and resistance rail. It actually looks like it is trading at a 52 week low if it doesn’t rally pretty hard for the rest of this week. Note the reverse symmetry coming down compared to the rally phase that started in 2008.

The weekly chart for CDE shows an inverse H&S bottom that looks like it is failing. You can see the rally took the price up to the S&R rail which is actually the neckline on the monthly chart.

The monthly chart for CDE shows the breakout and backtest to the big H&S top neckline.

The weekly look at ELD.to  is showing another failed inverse H&S bottom. The ten week rally made a good  move toward backtesting the big H&S neckline but has fallen just shy or reaching it.

The long term monthly look at ELD.to shows some very nice chart patterns. Note the big black bearish rising wedge that has the neckline running through to top of it. Many times a rising wedge will encompass the left shoulder and the head as you can see. The backtest to the bottom rail of the rising wedge formed the right shoulder. Note the last two bars on the right side of the chart that show the backtest to the neckline over the last two months.

FNV used the 10 week rally to backtest the bottom rail of its bearish rising channel. It also looks like a possible H&S bottom that has formed just below the bottom rail is failing. FNV just experienced the the second backtest to the bottom rail of the bear channel.

The GFI monthly chart is begging for the price action to at the very least test the 2008 crash low.

The weekly chart for GG shows it used this 10 week rally to backtest the neckline at 32.35. The possible H&S bottom looks like it’s in trouble if it doesn’t find support pretty soon.

The monthly chart for GG shows it breaking below the neckline and the long term bottom rail of the uptrend channel.

The monthly chart for KGC shows how it used the 10 week rally to backtest the 2008 crash low from below. It has been one of the weaker PM stocks as it has already broken below the 2008 lows.

The last several months shows very little price action for NEM. It’s very close to testing the monthly low closing price that would go back to the same period as the 2008 rally. Again the 2008 crash low is begging for a retest IMHO.

Below is a weekly line chart for NGD that shows it used the 10 week rally to put in a right shoulder that will create a double H&S top if it breaks below the lower neckline.

It’s getting late and I need to get this posted. I have more examples of precious metals stocks that have used this last 10 week rally as a consolidation phase or a backtest to a much bigger topping pattern. Nothing is broken in the strong bear market the precious metals stocks have been in for the last year or so as far as I can see. This looks just like your normal backing and filling before prices start moving lower again. I hope these charts paint a clear picture for you of where I think we are in the bear market for the Precious metal sector. All the best…Rambus

Its been awhile since I showed you an updated chart for the Dow. As this long term weekly chart below shows everything is still moving along according to the game plan I’ve laid out. I’ve shown you many of these bullish rising wedges that appear on some of the major stock market indexes that have all broken out to the upside. These bullish rising wedges confuse a lot of trades as they see them as always being bearish. My interpretation of these types of patterns, that form in the same direction as the trend, tend to be very bullish as it suggests that investors are anxious to get in and aren’t waiting around for lower prices. Some may call these types of patterns running corrections. As you can see the Dow is possibly forming a smaller red bullish rising flag, which again shows investors aren’t waiting around for lower prices. We have just started the 4th reversal point to the upside. A breakout above the top red rail will signal the bullish rising flag is complete which I would then view as a halfway pattern. There are two ways I measure a halfway pattern. The first way is to measure from the breakout of the lower pattern to the first reversal point in the upper pattern, labeled reversal point #1 and add that measurement to the breakout of the upper pattern to get your price objective. The second way I measure a halfway pattern is to measure the impulse leg up that starts at the last reversal point in the lower consolidation, in this case reversal point #6 to the first reversal point in the upper consolidation. You are measuring the the first impulse leg. Again take that measurement and add it to the last reversal point in the red bullish rising flag to get your price objective. Many times these two methods will be very close in price to each other. If this possible red bullish rising flag plays out as expected it will look like it formed about the halfway point when the top measured move is reached. Note the beautiful H&S patterns that reversed both the uptrend and the downtrend and the one that was a consolidation pattern. This chart shows, by following the price action, and not trying to second guess every little wiggle that is made, one will always find they are aligned with the trend either up or down in the big picture.

Tonight I would like to show you some charts on the US dollar that is finally showing a little action after a month or so of chopping around towards the lows. I have many different looks that might give us a clue or two on what to expect over the next month or so.

The first chart is a 6 month daily chart that shows a potential double inverse H&S bottoming formation. As you can see the smaller inverse H&S #1 had a nice long bar on the breakout followed by a backtest the next day. That completed the smaller inverse H&S bottom. The rally only lasted one day which gave us a point to drawn in the 2nd Neckline. The price action is now getting ready to backtest NL #1 again that would create the right shoulder for the bigger inverse H&S #2. So this is a critical backtest taking place in the next day or two to the 81.90 area. If neckline #1 can hold support the price objective of the bigger H&S bottom would be up to the 84.85 area which would be back at the previous high made in July.

Some of you may recall the potential Diamond that was forming, that for a time at reversal point #10, looked like it may be failing. After about 3 weeks or so of testing the bottom blue rail the price action finally began to liftoff as the short term daily chart above shows. The top rail, on the right hand side of the chart, is not set in stone. It is just a parallel rail to the lower rail on the bottom left hand side of the chart. This chart is a little contradictory to the inverse H&S bottom on the chart above as the bigger H&S #2 has a price objective up to the 84.85 area which would put the price for the US dollar above the top blue rail of this diamond. The smaller inverse H&S bottom has a price objective up to 83.12 which could work for the 11th reversal point. For right now it just time to watch the price action very close and see what clue’s it’s going to give us.

Stepping a little further back in time one can see how the possible diamond pattern could fit in nicely with the overall uptrend that has been in place, for the US dollar, since the fall of 2011 when gold topped out. The dollar is still running a series of higher highs and higher lows. This combo chart that shows the US dollar on top and gold on the bottom shows where the US dollar refused to make a new low while gold had its parabolic run to 1920. That was a very good positive divergence for the US dollar to gold.

There are several more possible scenario’s the US dollar maybe showing us before it’s ready to move higher. This next chart shows a nice uptrend channel that has been in place since the spring of 2011. You can see where the double bottom hump trendline and the bottom rail of the uptrend channel come together and has held support so far, albeit a little sloppy.

Below is another look at the uptrend channel that shows the 200 dma holding support.

I have shown you how the apex of a triangle can be critical support or resistance depending on which way the price action is moving. Below is a weekly chart that shows a triangle formation where critical support was found at the apex, twice.

The next chart is a long term weekly look that shows the big base the dollar has been carving out for almost 10 years. That top support and resistance rail has been holding the US dollar back but if the dollar takes that rail out that will be a big deal. You can see, from the bottom on the right side of the double bottom, there is a series of higher highs and higher lows all the way up to our present trading area. Nothing is broken yet that would tell us if this huge base was going to fail.

This next chart shows us the big base that was built back in the 90’s that looks like a fractal to our current huge base #2. Keep in mind a big base leads to a big move. These are monthly charts so change comes slowly but change they will.

The next chart I would like to show you is a monthly line chart that will probably give us the earliest clue when the dollar finally breaks through the top rail. As you can see it has been testing that top rail for many months now. It looked like the dollar had a chance to breakout last month but the top rail wasn’t ready to break yet, so the US dollar pulled back again.

I would like to show you one more chart, in this first part of this US dollar report, which is a combo chart that has the US dollar on top and gold on the bottom. There is a chart formation that is called a rounding bottom. They usually take their time developing but when they complete you know you have a really good base in which to launch a major move. The two red arrows shows you how the US dollar has been rounding up while gold has been moving down. Regardless of what some folks think there is an inverse correlation between the two. It’s not always perfect but you can see it on the longer term charts.

Tomorrow we’ll look at part two where I’ll  show you some of the different currency and how they are behaving. It’s important to get the big picture look so we have a guide to work off of. We want to try and trade with the big trend as much as possible.  All the best…Rambus

Well after Riding the 9 Month PM Bear with Rambus …and hating every minute of it (except for the obscene profits)…

I was Thrilled when Rambus finally ( on August 8th)… turned to the Gold Bull Side and bought his first of 5 positions in NUGT

to soon be followed by 1 position in UGLD and 2 in USLV

but alas…The Bull Has Bucked and the worm has turned and Today Rambus has exited this trade (for now)

With the following Paltry Profits…(each position was $25,000 in the Kamikaze Portfolio)

UGLD …Bought @ 17.67
……..Sold @ 22.21
………25%
………Profit $6,420

………………….

USLV …Bought @ 6.26 and 7.15
……..Sold @ 10.26
……..Average 55%
………Profit $27,375

………………….

NUGT …Bought @ 67.5… 70.1…. 72.3… 73.5…. 78.3
……..Sold @ 82.66
………Average 15%
……….Profit $19,405

……………………..

Most of us were not quite as Nimble as Rambus…but anyone taking these trades even close to where they were reco’d

has done well…congratulations

Also I note that many members at the forum are trading both sides of this volatile market…and using Chartology Principles

with even greater success

This is Rambus’s Fondest wish for each and every one of you

Follow his lead by all means…but learn to fly solo if you can…and you will be rewarded over and over

Its all at the Timeless Tutorials…we invite each and every Member to take the time to read them…There is a valuable lesson in each and every one

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Hopefully all Members have the email alerts set in their profile

and hopefully most of you in the Kamikaze Trades are able to trade at a moments notice

These trades cannot be left alone for too long ..if at all

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I really hope we can get back on the Bull Side soon

9 Months of Gruelling Bear followed by a mere 3 short but intense weeks of Bull… It just doesn’t seem fair !

Sir Fully ( Town Crier)

In this Weekend Report I would like to show you gold from the short term perspective to the long term look and everything between. As you know gold made a bottom back in June of this year that is still the low point for this two year correction. The question on everyone’s mind is this THE BOTTOM? There is never a way to know absolutely for sure until time passes but we can use some Chartology and see what it is showing us.

This first chart is a daily look that shows the June low and the price action that   gold has made trading off that bottom. You can see a black dashed down slopping trendline, Support and Resistance rail, that held gold in check. It wasn’t until the little red bullish expanding falling wedge developed that gold was able to takeout that S&R rail. Right now I’m looking at that little red bullish expanding falling wedge as a halfway pattern that projects up to the 1456 area as measured by the blue arrows.

Lets look at another daily chart that shows all the smaller consolidation patterns we’ve been following since last falls high. When I talk about following the price action this chart shows you exactly what I’m referring to. As you can see each blue chart pattern was a consolidation pattern to the downside with no signs of a bottoming or reversal pattern. Gold made lower lows and lower highs all the way down with the 50 dma working as overhead resistance. Since the June low you can see a change of character as gold has now put in a higher low and a higher high and is now trading above the 50 dma. It may seem subtle but this is the first step in creating an uptrend. How long this new uptrend will last is anybodies guess but I have a few charts that I will show you that may shed a little light on  how gold may progress from here.

Trading the markets is a lot like playing Chess. One always has to be thinking several moves ahead, trying to anticipate your opponents next move, so you don’t caught with your pants down. This next daily chart shows you what I think may develop over the next month or two that makes sense to me from a short term perspective to the long term look. From the short term look you can see the small rising channel, on the two charts above, with the bullish expanding falling wedge that has a price objective up to the 1456 area. That is an important area as it will setup a possible bigger pattern that I would like to see if the June low is going to be the bottom. On the chart below I’ve drawn in a possible neckline that runs from the counter trend rally in May after gold broke out of that 20 month rectangle. The 1456 area would be a perfect place for a possible neckline to be drawn in. The black arrows shows how I would expect a H&S bottom to form based on the Chartology of this area. I’ve added what I call a neckline symmetry rail which is just a parallel rail to the neckline that many times can give you a spot to look for a low for the right shoulder. Using this method the bottom for the right shoulder could come in around the 1300 area. The main reason I would like to see a H&S bottom form down here is because of the bottom rail of the 20 month rectangle that will act as resistance when it is approached. Many times when there is an important resistance rail a stock will form a consolidation pattern just below, that will then give the stock the energy it needs to absorb all the sellers and finally break through the resistance zone. In our current situation, if we in fact do build out a H&S bottom, that would be the perfect setup to then takeout the bottom rail of the massive 20 month rectangle. Keep in mind everyone who bought inside that 20 month rectangle are underwater right now and will be looking for a place to get out. So its going to take a lot of buyers to absorb all the sellers as the price action gets closer to the bottom rail of the big rectangle. The horizontal blue trendline is the bottom of the 20 month rectangle that comes in around the 1530 area. This chart below is just a possible scenario that may have to be tweaked once we know exactly where our current move stalls out. It maybe a little higher or lower than the 1456 price objective but this chart gives us a game plan to follow until it’s broken.

Now that we’ve covered this possible low in gold on the daily charts lets look at the bigger picture and see how the chart above fits in. We are going to go all the way back to the 2008 – 2009 bottom which was the most important bottom for the bull market at that time. As you will see there are some striking similarities between then and now. First, notice the H&S consolidation pattern that formed back in 2009 that was one of the finest H&S patterns I’ve ever had the pleasure to chart in real time. Let me show you what I mean. The chart looks busy but its all colored coordinate. If you divide the chart in half starting at the NL going straight down to the head that will leave you a left and right side to the H&S consolidation pattern. Start with the black arrows on each side of NL. On the left side follow the price action down to the green arrow. Then do the same thing on the right side of the chart following the price action down from the black arrow down to the green arrow. The do the something following the price action up from the green arrow up to the grey arrow on each side of chart. Next follow the price action down from the grey arrow to the purple arrows that made the low for the left and right shoulders. All the colored symmetry rails are parallel to the neckline. The symmetry continued on up to the pink arrows #1. Note the clean breakout and backtest to the big thick neckline.The reason I’m showing you this chart is that it maybe playing a very big role in locating our current June low. I’ve really darkened the neckline so there is no doubt what you are looking at.

Below is a long term weekly chart that shows the beautiful H&S consolidation pattern we just look at on the chart above. Notice how the neckline symmetry rail called the low for the right shoulder in 2009. I’ve extended the neckline all the way to the right side of the chart so you can see how this neckline extension rail has played a very important role in locating our possible June low. You can also compare the H&S consolidation pattern that was made back in 2009 to our possible H&S bottom that I showed you on the daily charts above. The black arrows shows how the price action may evolve in a perfect world. The black arrows are just a guide line based on where support and resistance resides. I’ve only shown the possible Blue expanding falling wedge one time, about 2 weeks ago, that could be the next consolidation pattern is a string of consolidation patterns that have been the hallmark of gold’s bull market.

This next chart is a long term monthly look that shows the 2009 low was actually made up of three separate chart patterns. There was the blue bullish expanding falling wedge, a red triangle that created the H&S consolidation pattern. Again notice the neckline extension rail made off the 2009 H&S consolidation pattern that extends to our June low. Another important feature of this chart is the black and white candles. As you can see when gold is in an impulse leg up it forms a string of white candles and when it’s in a downtrend, most recent decline to the June low, there were a string of black candles. If the month of August can end on a positive note for gold we will have our first two white candles that could be the start of the next impulse leg up.

Below is another monthly look at gold that shows the horizontal black dashed lines that are taken off the previous consolidation patterns highs that reversed their roll form resistance to support, black arrows.

Below is a chart I call just another brick in the wall. This chart shows you every consolidation pattern that gold has made since the beginning of its bull market. The $64,000 question is is our latest consolidation pattern, the bullish expanding falling wedge, just another consolidation pattern or brick in the wall. Stay tuned as things are starting to finally get interesting again after a two year consolidation period that maybe coming to an end. All the best…Rambus

PS: I forgot to add one more chart that compares gold to the XAU. This chart shows you how far out of whack this ratio is. You can see the spike made back in 2009 that was the all time high for this ratio. Now look to the right side of the chart and you can see this ratio went even further to the extreme. Note the little topping pattern and the breakout gap that occurred two weeks ago. This could be a very significance development as it shows the Precious Metals stocks may now revert back to the means where ever that may be. This is what we need to see if a new bull leg is being born.