In this weekend report I would like to go into the Rambus Chartology tool box and bring out a tool that you will only find in my tools of the trade tool box. I’ve shown you some charts recently that show “reverse symmetry” but I would like to dig a little deeper in the subject and show you in more detail some charts that are showing some beautiful reverse symmetry right now.

When I speak of reverse symmetry I’m referring to how a stock goes up, especially in a fast moving advance, will reverse back down in a similar fashion, once a top is put in place. In fast moving trends either up or down there is little time to create much in the way of consolidation patterns. Consolidation patterns are the key to keeping an uptrend or downtrend intact as they produce support or resistance zones when there is a correction. Without those consolidation patterns a stock can have very fast moves in the opposite direction similar to the way it went up. This is what I call reverse symmetry.

Head & Shoulder patterns are good examples of how reverse symmetry starts out, at least to the neckline. You have the formation of the left shoulder followed by the rally to the head then another decline that sets up the neckline with one last rally attempt that stalls out before reaching the top of the head. The price action then rolls over in reverse symmetry down that is similar to the rally on the left side of the head.

The CDNX shows you a good example of what I described above. Note the rally on the left side of the chart created the expanding triangle that is the left shoulder. As the bulls were still in charge the expanding triangle broke out and rallied to the red arrow which was the top. The bulls now were exhausted and had no energy left to take prices higher so the bears took over and took charge to the downside. The first really big clue that a H&S top could be forming is when the bulls failed to hold support at the top of the expanding triangle on the way down from the Head. As you know the top of consolidation patterns normally offers strong support for the next leg higher. When you see a failure like this this is a big warning that the trend is changing from up to down. As you can see the bears took the price action all the way down to point #4 at the bottom of the expanding triangle. By this time the bears were becoming exhausted and couldn’t push prices lower so the bulls came back in and a made a feeble rally attempt that could only push the price up to point #2 on the bearish rising wedge. As you can see the bulls and the bears fought it out creating the bearish rising wedge. For those that can visualize this, if you take the H&S pattern and fold it to the left side like a book, using the red arrow as your center point, you can see how the two sides match up, reverse symmetry. You can see how the bearish rising wedge, on the right side of the chart, lays on top of the expanding triangle on the left side of the chart.

Below is the same chart above that shows all the annotations and chart patterns. You can see once the big neckline was broken to the down side CDNX formed a H&S consolidation pattern that was the backtest. There is also a very large 5 point bearish falling wedge that broke out to the downside about 6 weeks ago and had a backtest 3 weeks ago. I expect the reverse symmetry to play out fairly hard to the downside since the breakout of the 5 point falling wedge that should take prices down to the 2008 bottom.

There are several precious metals stocks that have created large rectangle reversal patterns for their bull market highs. Reverse symmetry is showing up here as well. The first chart is a weekly look at EDR.To that shows the big blue rectangle reversal pattern. You can see where it broke down from the rectangle and had its backtest to the underside of the blue rail, that is now acting as resistance that corresponds to the price action leading into the rectangle on the left side of the chart. I’ve labeled the two symmetry points with a S that now shows a H&S top.

You can see a very similar setup on this weekly chart for BTO.To with the breakout and backtest on the right side of the chart that matches the same area on the left side of the chart.

CSI.To shows a similar setup that is a little bigger with more reverse symmetry taking place. Note the 7 point diamond head reversal pattern that has a red expanding bull flag on the left side of the chart and the red 6 point diamond consolidation pattern on the right side of the chart. Keep in mind it’s more of an art than a science sometimes. Even though the patterns are different in size it’s where they formed is the key. Again note the price action around the neckline that I’ve labeled with two heavy black S’s that shows the reverse symmetry on the left and right side of the chart. One last important note on this chart. Notice the rally off the 2008 low that started out in a vertical move before it created the inverse H&S bottom. That vertical move up in 2008 will offer very little resistance for this next leg down that is now starting. There is a good chance this stock will fall like a rock until it hits the 2008 low.

Lets look at one more example of a rectangle reversal pattern that showed reverse symmetry and is quite a bit further along in its move down than the charts above. Again the heavy black S’s shows the reverse symmetry. Note our current price action that is taking place right now on the right side of the chart. It looks like FNV has put in a small double top with a backtest over the last 3 days. For the more experienced trades this is a good low risk entry point for puts or shorting this stock. The double top trendline is your line in the sand.

Now that you should have a fairly good grasp of what I’m referring to when I talk about reverse symmetry I want to show you some weekly line charts for some of the precious metals stocks that will drive home the point of what I’m trying to get across here. These chart aren’t for the faint of heart as they show the carnage that has and is taking place right now regardless of all the reason the precious metals stocks should be bottoming and going up. I’m still in total amazement of all the bottom callers, all the way down, that fail to look at the most basic principals of technical analysis. Lower lows and lower highs equals a downtrend. Folks you don’t have to be the brightest bulb in the room to see what a downtrend looks like. Below are some examples of what I mean.

These charts will speak for themselves. First GFI weekly line chart.

IAG

AU

BVN

CDE

ELD.To

NEM

On a weekly closing basis ABX is testing its 2008 crash low. It’s supposed to be the leader. What does that say about the rest of the precious metals stocks?

Lets take a quick look at the weekly line chart for the HUI. It could still backtest the 268 area just above at the previous S&R rail on a weekly closing basis. If I switched this line chart to a bar chart you would see that 268 was hit last week as the high

This chart below is exactly the same chart above only I’ve made it a bar chart instead of a line chart. Note how the price action rallied up to the 268 that showed resistance on the line chart.

HUI daily line chart…

I’ve shown you this daily line chart for gold that shows how I’ve been looking for some reverse symmetry down once the big rectangle was broken. It’s finding support right now on the symmetry rail that goes back to the left side of the chart with the purple arrow. A break below this latest support rail will usher in the next leg down.

There are few times in the markets when they present such a clear picture of what is happening. The precious metals complex has been showing itself since the October 2012 highs with one of the most relentless moves down I can remember. Just look at those weekly line charts. Anybody looking for strength to get out of their precious metals stocks are trapped and they know it. They are now at a point where there are few options for them. They either sell and cut their loses or they have to ride the whole thing down. The problem is there is no law that says the 150 area on the HUI is going to be THE bottom. It looks like a good place for a bounce but will it be just that? I’m just glad we are not trapped in that situation right now. Even if you haven’t traded any of the short etf’s you have your hard earned capital intact. There will come a time when we get an intermediate term rally in which we can take advantage of but until we see some kind of bottoming pattern there is no bottom. Have a great week

…All the best…Rambus

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Editors Note

Rambus Chartology is Primarily a Goldbug TA Site where you can watch Rambus follow the markets on a daily basis and learn a great deal of Hands on Chartology from Rambus Tutorials and Question and Answers .

Most Members are Staunch Goldbugs who have seen Rambus in action from the 2007 to 2008 period … and now Here at Rambus Chartology since early 2012 where he has prepared us for this debilitating PM smackdown.

What is he seeing now ?

http://rambus1.com/

In this weekend report I would like to answer some questions presented at the forum this weekend. First lets look at silver and see what the charts are telling us especially after last weeks price action. Lets start with a daily look that shows the downtrend channel that began back in October of last year. You can see all the different chart patterns we’ve been following during this delcine. You can see what happens when a strong support rail gives way. The bulls were exhausted and the bears took charged and moved the price down to the 22 area where we are getting our first counter trend rally after the breakout.

This next daily chart is the one I showed you on Friday night that shows the parabolic arc and the backtest to the 25.60 area. There are a lot of resistance points in that red circle that should hold any rally in check. If for some reason silver cuts through that overhead resistance that would be a warning flag that silver is stronger than what the chart are saying right now. It’s just something to keep in the back of your mind.

The weekly chart shows a classic 6 point rectangle consolidation pattern. Point #4 is the only flaw where the price action poked above the top blue rail during the week but close the week below the top blue rail so I view that as an aberration. The backtest will come in at the 26 area where the bottom rail should now reverse its role from what was support to now resistance.

The monthly look shows the major uptrend channel for the bull market that started back in 2002 after finally breaking out of the blue 4 year bullish falling wedge. At the top right hand side of the chart you can see our current downtrend channel that started off the 50 all time high made 2 years ago this month. You can see that this monthly chart is showing lower lows and lower highs which is the definition of a downtrend. If silver trades within the parallel downtrend channel all the way down to the bottom rail of the major uptrend channel, silver could fall as low as 16 where the two bottom rails intersect. That would give the RSI indicator, at the top of the chart, a chance to reach the area of the two previous major lows at 36.50 purple arrows. If it did play out close to what the charts are showing and silver bottomed out at the bottom rail of the big uptrend channel that would still leave the bull market intact. I would have to consider that area a major buying opportunity.

Next I would like to show you several weekly chartS for SLV that show two different type of consolidation patterns, that fit with the Chartology of chart patterns. The first weekly chart for SLV shows the 8 point diamond consolidation pattern that we’ve been following since the first of the year.

Produced December 21 2012

So far its played out beautifully making lower lows. The big blue diamond gave us an early indication that the big 20 month rectangle was going to break to the downside. You can see the diamond broke out in the middle of December of last year at 31.50 a full 5 1/2 points higher that where the big rectangle broke out at 26 or so.

This next weekly chart for SLV shows another consolidation pattern that also makes sense from a Chartology perspective. First lets look at the parallel downtrend channel that shows 2 red circles toward the top. Those two red circles show what I call, Symmetry Failures. Failures to reach the top and bottom rails of the downtrend channel. These are impossible to see early on. It’s only after the downtrend channel starts to mature that you can finally recognize them as such. It’s always important to tweak your trendlines  once you have more information to work with. Now lets look at blue bearish falling wedge that broke out two weeks ago with that huge gap. Whenever you see a gap and, Especially on a weekly chart, it’s always good to pay attention. Many times the gaps will show up at breakout points. That gap made 2 weeks ago on this chart also shows up on many of the precious metals stocks as well. The backtest would come in around the 24.75 area. The brown shade area shows the minimum price objective down to the 17.80 to 18.35 based on two measuring techniques I use.

Lets take a look at the US dollar that shows it consolidating in a loose rectangle just above the brown shaded support and resistance zone. I call it loose because the top rail is sloppy, but you can see the trading range that  has completed 4 reversal points and is now trading halfway down to the lower trendline. It’s trading smack dab in the middle of the rectangle right now. Usually the US dollar charts shows fairly nice tight trading ranges but lately they have seemed a little sloppy to me. The patterns are there but harder to define for most folks. The price objective for the red rectangle halfway pattern would be around the 86.25 area which will help our EUO trade.

The next chart shows why the US dollar is trading in this rectangle trading range. It’s basically trapped between the top brown shaded support and resistance zone and the brown shaded support and resistance zone I showed you on the chart above which is the top point of the 5 point triangle reversal pattern.

I posted this next chart the day the US dollar broke out of the 5 point triangle reversal pattern. The blue shaded area shows where the US dollar and gold were trading on that day. As you can see the inverse relationship is still alive and well. I think once the dollar breaks out above the red rectangle gold will be finishing up with its counter trend rally.

Lets take a look at the weekly log scale chart for the HUI that shows the weekly gap is still in play as the HUI failed to close it completely this week. The black rectangles measures time and price. If the bottom of the halfway gap plays out similar to the top half then the HUI could reach the bottom around the 160 area in October of this year based on both halves being equal.

Here is an interesting observation. On the chart above I showed you how the 2 rectangles each measured time and price  from the halfway gap that gave us a price objective down to the 160 area in October of this year. This next chart I’ve shown you before that shows the reverse symmetry taking place from the rally off the 2008 low to the height of the left shoulder. What is interesting is that the 2 rectangles on the chart below are unrelated to the two rectangles that measures the halfway gap. As you can see on the chart below both charts come up with the 160 price target in October of this year using 2 completely different scenarios.

On a positive note lets look at the very long term 30 year chart for Silver that shows two massive inverse H&S bottoms. This month the price action has come down and is testing the big neckline #2 which comes in around 23 the area. If silver ever closes below neckline #2, on a monthly basis, that would that would be bearish. If this big base holds then silver is going considerably higher as shown at the top of the chart. The main thing right now is to watch the price action on the shorter term charts and see how the bottoms of the consolidation patterns that I showed you earlier, hold up. If we start to see prices breaking above some of those bottom rails on the 20 month rectangle or the bottom rail of the bearish falling wedge then we will need to re-evaluate the situation accordingly. Silver will talk to us, we just have to listen.

Below is a 30 year line chart for silver that shows the backtest still in progress down to the 21 area on a monthly closing basis.

This last chart I would like to show you is a long term look at gold using an 8 year low followed by an 11 year high cycle chart that the Aden sisters posted back on June 22, 2010. Their chart shows up at the end of the article.

http://www.safehaven.com/article/17245/golden-times

After studying  and seeing their chart I built my own chart so I could follow the 8 and 11 year cycles as they described them. Last year, in February was when the next 11 year cycle top was supposed to come due. At the time I noted it on my chart and just observed to see what would happen. I knew if the 11 year cycle high was in place that some sort of top should also be in place. Two weeks ago when gold had the big breakout move down, that confirmed for me, that the 11 year cycle high must be in place even though a whole year went by before the breakout came. You can now see the top, clear as day, on the chart below.

Oh I almost forgot for those inquiring about a Gold Target I posted this as the Friday Nite Chart:

Usually on Friday night I’ll post a few charts that may be interesting to the current environment. Tonight lets look at an old, long term, 6 year daily line chart for gold that shows a H&S consolidation pattern that formed back at the crash low in 2008. It was one of the most symmetrical H&S patterns I ever charted. It’s hard to tell from this long term look but it was a thing of beauty. It’s hard to remember for some but the gold neckline came in at 1005 as shown by the blue and red arrows. I’ve extended the neckline, brown shaded area, all the way to the right side of the chart. If I was looking for the ultimate support zone it would have to be the brown shaded neckline.

I hope these charts gets everyone up to speed as to where we are and where we might be headed. The best I can tell right now is that the last quarter of this year looks like a decent place to see a good bottom for the precious metals complex. We might get more clues as this decline matures. We might see a consolidation pattern or two form before we bottom out that may give us a little insight. Right now, with the information we have, October through to December looks ripe for a time and price objective that could yield a good low. I’ll show you a few more things in the Wednesday Report that I’m looking at that might shed some more light on the bottom area later this year. All the best…Rambus

Editors Note

Rambus Chartology is Primarily a Goldbug TA Site where you can watch Rambus follow the markets on a daily basis and learn a great deal of Hands on Chartology from Rambus Tutorials and Question and Answers .

Most Members are Staunch Goldbugs who have seen Rambus in action from the 2007 to 2008 period … and now Here at Rambus Chartology since early 2012
where he has prepared us for this debilitating PM smackdown.

What is he seeing now ?

http://rambus1.com/

Insomnia is setting in after reading Rambus Ultimate Targets tonite

As a Goldbug these targets are devastating !

As a Trader (Darth Trader)…I am trying to remember this from a Rambus Post This past February (hard to believe its only 2 short months ago)

http://rambus1.com/?p=10039

“The easiest and hardest thing trading this decline, once it starts, will be to ride the trend lower without getting kicked off. Easiest in that you don’t have to do anything but stay in your position. The hardest because it will be very difficult to ride out the volatility. When you look at the charts above it looks easy to ride the move down to the H&S price objectives but when your living through it it’s an altogether different thing. Once below the necklines the volatility will increase dramatically where there could easily be a 100 point swing in the HUI. I expect to see at least one good consolidation pattern form that may show up halfway down to the price objects. Another possibility is there could be a series 2 or 3 smaller consolidation patterns form before the bottom is reached. Its time when one has to get mentally ready for what could be the ride of a lifetime if things work out as expected. The big money will be made by those that can stay with the trend and not panic every time there is a rally. Easier said than done.

all the best

Rambus ”

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Goodnight Chartologists where ever you are

Fully

I was going to write this article several weeks ago but the move in gold took the spotlight and I had to put this on the back burner. Now that gold has settled down a bit I would like to show you some charts that pertain to the Risk On trade that are showing commodities entering a weak period. By the looks of some of the commodity charts it looks like some deflation is on the way. Even with all the money printing it doesn’t seem like enough to stem another round of weakening commodity prices. So lets see what the charts are telling us.

The US dollar is key if we are about to enter the Risk On trade. If you recall the dollar sky rocketed during that bout of deflation as precious metals, commodities and the basic materials stocks fell on hard times in 2008. I know there is a lot of talk about inflation taking off but as the charts below will show, now doesn’t look like the time we have to worry about the inflation scenario.

The US dollar has been making a series of higher lows since the bottom in the summer of 2011. Late last year and early this year the US dollar made a double bottom which is now the head portion of a H&S consolidation pattern. The dollar is still working on the right shoulder but when the neckline gets broken to the upside that will start putting pressure on commodities and basic materials. A break above 84 should get the ball rolling.

This next chart is a weekly long term combo chart with gold on top and the dollar on the bottom. Note the purple dashed vertical lines with the purple arrows. What that shows us is how the dollar refused to make a new lower low while gold went on its parabolic run to 1920. This was a major positive divergence for the US dollar to gold. Note the big rounding base the dollar has been carving out while gold has been trending down. It’s not perfect but you can see the inverse correlation between the two. A break above that long term black dashed support and resistance rail at 86 will really put pressure on gold and the rest of the Risk On trades.

Lets take a look at one more chart for the dollar that is a long term monthly look that shows the huge base that is getting close to completing. You can see, on the chart below, there was a big base built back in the late 80’s and early 90’s, labeled big base #1 that led to a multi year rally in the dollar. Notice how similar the two big bases are. Once the dollar breaks out above the support and resistance rail, the big base #2 will be complete. Keep in mind this is a monthly chart so the move is not going to be a flash in the pan type of event but a multi year rally.

Lets look at the CCI commodities index that is showing the price action has been trading within an expanding downtrend channel since toping in the spring of 2011. The 20 and 50 week moving averages are just about ready to cross that will give a sell signal.

The very long term weekly look at the CCI shows some very nice chartology that I used during the initial bull market off the 2002 bottom. I’m still amazed by the random walk of the stock markets that can create such beautiful symmetry and patterns that can be used to help take out a lot of the noise that keeps many investors confused.

The old CRB index is breaking down from a small H&S consolidation pattern within its expanding downtrend channel.

The DBB Multi- Sector Commodities Trust Metals Fund has broken out of a very nice H&S top and is in the process of making new multi year lows.

Copper plays a big role in the Risk On trade. The weekly chart below shows the small H&S at the top of the chart that reversed the uptrend that began off the 2008 bottom. The big blue triangle is just the first consolidation pattern that has formed since the downtrend began. If your looking for inflation you don’t want to see this commodity fall in price.

The long term monthly chart for copper is very interesting as it shows a big unbalanced H&S top that has just recently broken out. That’s a big top by any standard. It should have enough energy to move the price of copper down to the 2008 lows. Note the big negative divergences on the RSI on the top of the chart and the MACD on the bottom. Just think of the neckline as a line in the sand, above positive and below negative. Keep it simple.

The COPX broke out, with a gap, of a very symmetrical triangle consolidation pattern this week. There could be a backtest to the bottom blue rail at 10.75 before the move down begins in earnest.

The IYM is your Basic Materials etf that looks like it’s completing an unbalanced double top. It had a breakout gap on Monday along with many other stocks and is now in the process of backtesting the double top trendline at 67.30 or so. This one really needs to breakdown for the Risk On trade to gather momentum to the downside. We’ll see if the backtest now holds as resistance.

I’ve been following this H&S top for KOL, coal etf, for what seems like an eternity. As you can see after breaking down through the neckline the price action has been testing the neckline from below for a year or better. It now looks like it’s finally starting to break a little harder to the downside. That’s another very larger H&S top that resembles alot of the precious metals stocks.

Lets look at the SLX which is a steel etf that just broke out of a pretty symmetrical triangle this past week. Note the small H&S at the top of the chart that reversed the uptrend off the 2008 bottom. This is Chartology at its best.

If we are truly entering another period of Risk On trades, Oil needs to participate along with the rest of the commodities complex. Oil broke out of a symmetrical triangle a week or so ago. Note the little H&S top that formed at the apex of the blue triangle that tipped us off that the triangle was going to break to the downside. Here a clue there a clue and pretty soon a picture starts to emerge.

The second to the last chart I would like to show is a weekly chart for Oil that is showing a very large H&S topping pattern that will have a big impact on the Risk On trades. As I showed you the small H&S top, on the daily chart above, that gave us a clue that the triangle was going to break to the downside, we now have a similar setup with this weekly Oil chart. Here you can see the breakout of the blue triangle is giving us an early warning that the big neckline is going to get broken to the downside.

I want to leave you with a very long term chart for gold that I have now labeled as having put in a very large unbalanced double top. It pains me to do this, as I know most Chartology Members are first and foremost Goldbugs, but I can’t argue with what the price action is showing. Until last week we still didn’t know for sure if the trading action below the 1920 area was a consolidation pattern to the upside or a topping pattern. There is now no doubt that gold has put in a major top that is going to take alot of time to turn things around. As you can see on the long term monthly chart gold has now put in a series of lower highs and lower lows which is a downtrend, Chartology 101. This chart shows exactly how a market that has gone parabolic, which some will disagree with me, breaks down. Last weeks major sell off has trapped many gold investors who bought into the unbalanced double top area, which will now be looking for a place to sell on any strength. Normally in these type of situations the market won’t be very obliging and will inflict much pain for those that don’t recognize or understand what is taking place.

What these charts above are telling me is that inflation isn’t on the horizon right now. We need to be concerned about another bout of deflation and gear our portfolios to take advantage of that scenario. All the big H&S topping patterns that have shown up in the precious metals stocks, oil and many other commodities are telling us this isn’t going to end anytime soon. The US dollar is on the verge of breaking out of a huge base that is telling us this could be a multi year event and not just a flash in the pan. I hope the charts, I presented in this article, paint a clear picture of what lies ahead for us, regardless of how some interpret the fundamentals to be inflationary. The charts don’t lie but the misinterpretation of the charts can lead many astray. Knowing how  the battles between the bulls and the bears show up as a consolidation pattern or a top or bottom, can give one an edge if one can read between the lines and keep an open mind.  All the best…Rambus

Editors Note
Rambus Chartology is Primarily a Goldbug TA Site where you can watch Rambus follow the markets on a daily basis and learn a great deal of Hands on Chartology from Rambus Tutorials and Question and Answers .
Most Members are Staunch Goldbugs who have seen Rambus in action from the 2007 to 2008 period … and now Here at Rambus Chartology since early 2012 .
What is he seeing now ?

http://rambus1.com/

Many of Our Members are asking how Rambus Chartology was conceived .

……………………….

This is as good a time as any to explain who we are and how we happened !

……………………………..

Our Website was started December 2011

At first Rambus Chartology was know only to those at Goldtent (www.goldtent.com)

Which by the way was billed as the best damn Gold Site On the Net !

6 Years running self supported  Bulletin Board with some of the finest and brightest and definitely most militant Goldbugs you could ever get to know…And a cast of real interesting characters !

2.5 million Hits a month…thousands of lurkers and hundreds of posters !

Rambus was posting there and was a cherished member in 2007 and 2008

We loved him, as he showed Continuation pattern after Continuation pattern and Gold rose strongly as did Silver and the PM Stocks..He nailed every move .

…….All was right with the Gold World……

Then Rambus switched course ! egad !

Some damn thing about a breakdown that he didn’t like the looks of …but of course no goldbug could see .

..Long story short ..Rambus called the HUI 150 bottom…(his target was 160)…a long time before it happened

But when he posted his now famous “What If” post (linked at the Wizard of Rambus ) we started to challenge his work

all of a sudden his shoulders weren’t big enough on his heads…his trendlines were arbitrary…and he took a lot of criticism from Us.

And no one participated more than I , Fullgoldcrown !

So he did what any self respecting Chartologist would do .

He took his Bearish Falling Wedges and 11 Point Diamond Topping Patterns and went home…Ozark Mountains Arkansas !

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2008 2009 2010 came and went ..and Goldtent was thriving…but every so often someone would say..I wonder whatever happened to that guy Rambus

He was so annoying but so right ?

Anyhow after 3 long years in self appointed exile….. Dave (Rambus) contacted me and said

He was reading ” The Tent” and was concerned again that everyone was all in ,  but there was again potential trouble on the horizon .

He sent free charts for me to post there..but goldbugs being goldbugs…we weren’t really listening…

I Encouraged Dave to Start his own site…and told him if you Build It They will come .

I am sure you longer term members all agree .. his work is unique .

He was reluctant to go through the drama and trauma at first but thankfully he hooked up with Audept who is The other Tech WIZARD on the site..

Audept is the Goldtent site creator and Webmaster

who also created this ever evolving Rambus Chartology Site !

Look for his voice interviews coming to the site some day soon !

……………………………………………….

So who is Rambus ?

Just a good old down home country boy who happens to have a Wizard like knack for Charting Market Psychology (Chartology)

and for being able to teach (preach) these principles in a very enlightening entertaining and informal manner.

I would describe him as a humble strait shooting teacher who learned his principles out of a book , Edward’s and Magee …the old fashioned way…then practiced and failed
with sharp pencil and paper and ruler until he compiled enough knowledge to learn to spot things like 11 point topping patterns that are absolutely Invisible to anyone else

(See the Diamond In the Rough post at the Wizard of Rambus)

His Handle Rambus derives from his favorite trading stock of the tech mania

which he played until 2001 when he fell in love with the Gold Sector

Dave has told me PMs have the BEST and most concise Chartology patterns of all the sectors .

Alas he is Not a Goldbug. He Doesn’t concern himelf at all with manipulation…its all in the charts anyhow

I of course used to furiously debate him on this point. But my take ..the manipulation is a source of supply and its baked into the cake too .

Personally I am a Goldbug to the Nth degree… but I decided I didn’t want to replay 2008 as I watched my pf loose 80%…as remote a possibility as that seemed to be

So How does a Goldbug like me rationalize being Darth Traitor…Holding DUST instead of NUGTs ?

Like This :

We all thought we would buy PM Stocks for the leverage…The Idea of course was to.. at the right time when Precious metals stocks go Nucken Futz

sell em and buy Physical

The leverage was expected to be 3 to 5 times

Wrong savage

How has that been working for us goldbugs ?

But NOW…I believe I have become a Wizard too !

I have just cashed some profits made in DUST this week and bought some really cheaply priced Gold Maple Leafs

This is Alchemy .. turning Dust into Gold !!!

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This site also has 1 more participant without who we could not thrive

Mrs Rambus…Chief Financial Officer Extrodinaire

(Behind every successful man is his CFO 🙂
…………………………..

So that’s who we are and that’s how we got here and we are really excited to be attracting so many

who are willing to do the time and learn this method to Improve their trading skills

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One of our mottos has evolved to :

“Give a Man a Chart and he will Thrive for a Day

Teach a man to Chart and he Thrives for a lifetime”

In Keeping with the Wizardry on the Site…we invite you all to use the Chartology Forum for banter and questions with Rambus and other members

Thank you all for joining us and as Rambus Says “Let the Games Begin”

Fullgoldcrown (For Rambus Chartology)

I just want to show you an update on the long term chart for gold that had shown a parabolic move off the 2001 low. The bull market was a thing of beauty creating one beautiful consolidation after another. I used this chart in my “All Hail the Queen” post to show the beautiful symmetry of this bull market.

All Hail The Queen :

http://rambus1.com/?p=8414

It wasn’t a week or so later, after the post was made, that the price action started to change When gold moved below the last black parabolic trendline I knew something was amiss.

As you can see I was super bullish when I did that post but when the price action started to change I had to change with it no matter how bullish I felt inside. The breakout became more labored and just didn’t fit the bill anymore as to what a true breakout should be. Several months ago I labeled the apex of the last triangle, that was failing, showing that if the apex gave way that would be very bearish setup for gold. When gold broke below the apex, that is called, An End Around the Apex Move. The reason it’s so bearish is because, where the upper and lower trendlines intersect at the apex, that is where all the energy is focused. As you can see the energy was released to the downside in one big move.

For those still wondering, if the scenario that I showed in the All Hail the Queen post is still valid, I have to say no because we have three failures. One, the blue triangle failed. Two, the last uptrend rail failed. Three, the apex failed. This isn’t supposed to happen and if one doesn’t act on what the charts are telling you, you will be feeling the pain for ignoring the information down the road as many staunch gold bugs are feeling right now. The trap has been sprung on the gold bulls and now it’s a game of survival. If I can just get out even I will sell, is the new mantra. So at this point most rallies will be sold by those trapped gold investors. The same situation is taking place in the precious metals stocks right now.  Survival mode is taking over the psychology in the precious metals complex.

One last note on the chart below. Even though the scenario didn’t work out as I expected it is still a very good study in the chartology of a bull market that lasted almost 13 years. It served me very well for many years.

In this Weekend Report I would like to take an unbiased look at the precious metals complex that has been showing substantial weakness since the October highs of last year. I’m going to show you some charts, further along in this article, that will shed some light on what is really taking place right now. Keeping an open mind is key to being successful in the markets.

This week marked the breakout of gold from the very large 20 month rectangle that finally let us know that the big sideways trading range is in fact a consolidation pattern to the downside and not a reversal pattern to the upside. The breakout was classic from a Chartology perspective. You can see on the the chart below there was a very large daily bar that was created on Friday April 12, 2013 on heavy volume. A breakout like this shows the bulls were exhausted and the bears are back in charge. The bulls had no fight left and are now in retreat looking for the next place in which to try and establish some support. It’s possible that we may see a backtest to the bottom blue rail of the large rectangle that will now reverse its role from support to resistance before the move lower begins in earnest.

Next lets look at the silver rectangle that shows a very similar setup to gold. As gold broke significantly below the bottom rail of its rectangle silver is just barely cracking its bottom rail at this time. The three fanline pattern, starting off point #5, is giving us a heads up that silver will break below its bottom blue rail. Also like gold you can see an even number of reversal points, six, that tells us this is a consolidation pattern to the downside. Another clue that this pattern is a consolidation pattern to the downside is that it has formed below the previous high. In order for this pattern to be a reversal pattern to the upside it would need an odd number of reversal points such as 5, 7 or more. The evidence is mounting for a consolidation pattern to the downside.

Now that we can see that gold and silver have broken out from their respective six point rectangles lets look at the HUI and see if the precious metals stocks are in a confirmed downtrend like gold and silver. This next chart shows a huge H&S topping pattern for the HUI that broke down in February of this year a full two months before gold and silver did. The precious metals stocks are leading the way down for gold and silver that puts the whole complex in a confirmed downtrend or cyclical bear market.

Next I would like to look at some shorter term charts for gold, silver, and some precious metals stocks that will show how bad the situation really is for this sector. I just want to say right here, before we look at the charts to follow, that the Chartology you are about to see is what it is and it’s just my interpretation of what the charts are showing me. Many of you will be in denial and will not accept what these charts are saying and that’s fine. Just use them as part of your overall view of the what your own interpretation of the precious complex is and take it from there.

The first chart I would like to show you is a daily look at gold that is showing a parabolic downtrend that has been forming since the important high made in October of 2012. Most of the time all we here about is the parabolic moves to the upside that happen on a much larger scale. Parabolic moves can also happen in the short term charts as this daily chart shows.

Now I would like to show the the same chart that shows why this parabolic move lower is developing the way it is. You can see there have been three smaller chart formations that have formed one below the next that is creating the parabolic downtrend. Many are trying to put straight trendlines on their charts trying to show a downtrend channel which isn’t working very well. As you can see the curved trendline was hit four days ago along with the backtest to the small red triangle that has led to this most recent decline.

Silver has a beautiful looking parabolic downtrend that started to form off its double top high back in October of 2012. Again you can see how each smaller red consolidation pattern has formed below the previous one creating the curved downtrend rail when the tops are connected. You can also see that silver has cracked the all important bottom support rail at 26.

The precious metals stocks are several months ahead of gold and silver and are showing a strong parabolic downtrend well in progress. The Chartology, of this daily chart for the HUI, shows all the smaller consolidation patterns that have formed off the October high made last year. From a Chartology perspective this chart is as good as it gets. We have been following this beautiful downtrend channel since the breakout from the black 5 point bearish falling wedge reversal pattern. Some say I show too many chart patterns that are unnecessary but from my perspective each and every consolidation formation is giving us an important clue to the bigger picture. If you study each consolidation pattern, on the chart below, you will see each one has at least four reversal points which is what you have to have to form a consolidation pattern at a minimum. Sometimes there are six, eight or more and as long as there are an even number of reversal points you will have a consolidation pattern that will breakout in the direction of the move leading into the consolidation pattern.

Lets look at a weekly chart that shows a parabolic downtrend that happened back in the later part of the 1990’s on CDE. You can see all the clean touches that occurred on the curved downtrend rail. Try to put a straight trendline where the parabolic trendline is and see what you get.

Lets now look at some individual precious metals stocks that exhibiting some parabolic downtrends. ABX is the biggest precious metals producer and is showing an accelerating parabolic downtrend, that started back in August of 2011. ABX has also broken out from the massive H&S top that few are willing to recognize even at this point in time. Denial can make an investor broke faster than anyway I know.

Lets look at the monthly chart, for the biggest cap precious metals stock, that really puts things into perspective regardless of how one may perceive the fundamentals. This chart isn’t lying but the the strong fundamentals, that so many are espousing for the precious metals complex are.

ASA is showing a very large parabolic downtrend that stated all the way back in October of 2010.

The monthly look at ASA shows a double H&S top formation that is in the third month of breakout.

AU is showing us a parabolic downtrend that started in October of 2010 which now seems to be accelerating to the downside.

In conjunction with the parabolic downtrend channel AU has also broken out of its own massive H&S topping pattern.

Lets look at one more precious metals stock that has an accelerating parabolic downtrend that started last October of 2012. As you can see it has lost well over 50% of its value since the parabolic downtrend began.

The weekly chart for AUNFF shows its topping pattern as the five point triangle reversal pattern.

I could show you countless other precious metals stocks with the same characteristics as the ones above. We don’t have to beat our heads against the wall to figure out why the precious metals complex is so weak right now. All we have to do is follow the price action and everything else becomes irrelevant. This is the beauty of Chartology. It doesn’t make any difference what the fundamentalist say or how short or long the commercials are, who’s buying and selling the precious metals, or how the stockpiles are falling to such low levels. It’s all baked in to the price action that shows up on charts. How one interprets this price action is an entirely different story. Some use Elliot Wave and some use cycles to interpret the charts. For me, following the price action, by looking for patterns that form consolidation or reversal patterns is the purest form for analyzing a stock or index as the charts above show. Just one simple trendline on a chart, think neckline on the ABX chart above, can mean the difference between success or failure. Above the neckline and the chart is positive and below is negative.

It still amazes me how this old school of charting is still relevant in this day and age with all the high powered computer programs out there that are trying find an edge in the markets. Understanding the price action between the bulls and the bears is a never ending story that goes back to the beginning of the stock markets. Its the interpretation of these battles, in the form of consolidation or topping patterns, is all that is needed to be on the right side of the markets more than on the wrong side. And that is the bottom line. To be right more than you are wrong. All the best…Rambus

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EDITOR’S NOTE :
Rambus Chartology is Primarily a Goldbug TA Site where Members watch Rambus follow the markets on a daily basis and learn a great deal of Hands on Chartology from Rambus Tutorials and Question and Answers .

Most Members are Staunch Goldbugs who have seen Rambus in action from the 2007 to 2008 period at www.goldtent.org and now Here at Rambus Chartology since early 2012 .

What is he seeing Now ?

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With today’s breakout of the huge 20 month rectangle for gold, tonight would be a good time to take another look, and see what has led up to this important breakout. This first chart is one I posted at the beginning of March when gold was trading at point #3. I put those black arrows on this chart to show you where I thought we should at least get one more reversal up to point #4? that was just below the brown shaded support and resistance zone. Some of you may remember this chart when I was looking for the 1620 area for a possible 4th reversal point. Sometimes the last reversal point in a rectangle will hit the middle of the rectangle before the actual breakout begins, red horizontal trendline  As you can see this was the case this week.

This next chart is a longer term daily look that shows all the consolidation patterns that have formed since the last high at 1800. Today’s price action shows a classic breakout of a major chart pattern, the 20 month rectangle. The red rectangle had a measured move down to 1475 which we hit today. That last red rectangle strongly suggested that the breakout of the big 20 month rectangle was going to happen because the price objective of the red rectangle was roughly 50 points below the bottom rail of the 20 month rectangle.  It should not surprise you if we now get a backtest to the underside of the big rectangle at 1530 before the price moves lower. Possible but no guarantee.

We finally got our answer to the question asked from the chart below.

This last chart shows the best case scenario for gold. If the 20 month rectangle is a halfway pattern then the price objective would come in around the 1392 to 1435 area. This is just one scenario of several scenarios that are in the play book right now. Stay tuned as today marks a potential turning point for gold. All the best…Rambus