September 4th daily update. After breaking out of the 5 point triangle reversal pattern USLV has been on a tear. Its signaling it has alot of strength to this move as the pullbacks are very shallow. The green arrows shows the date and price of our 2 buys in the blue 5 point triangle reversal pattern.

Just a quick update on the star performer for the month of August. Weekly look shows the breakout of the 5 point triangle reversal pattern. I like to see nice long bars when a stock begins a new leg up. Its a sign of strength.

Note the percentage change for the month of August at the top of the chart, red circle.

I just want to quickly update NUGT from yesterday. So far the 38% retrace is holding as support. Today’s rally is taking the price action back up to the all important support and resistance rail. I want to add another dimension to this chart hopefully showing some reverse symmetry back up. Note where the pointers from the support and resistance rail are pointing right now.  If we are starting to reverse symmetry back up, today’s price action back up to the S&R, shows us the bulls are still strong by the ease of rallying backup to the S&R rail. Next the bulls really need to show who’s in charge by either gaping above the key S&R rail, or producing a nice long weekly bar, closing close to the high for the week. Price with some good volume would also be nice..

Its nice to see the closing price on the high end of the weekly bar this week. Double bottom still in progress.

Seeing its the end of the month I’ll post the monthly chart for NUGT so you can see what it has done on a percentages basis. You will see why we call them Kamikaze trades. NUGT

In this weekend report I think its time to look at the precious metals complex as last weeks move finally showed some underlying strength that took prices up to some important resistance zones. At the close of trading last Friday, August 24th, gold, silver and the precious metals stock indexes were all trading at key trendlines. We know there hot as they all stalled out on their initial hit which should be expected. The next couple of weeks are going to be critical for the precious metals complex as those important resistance rails will need to be taken out before a serious new leg up can begin. Last weeks price action was very positive as there was enough energy to rally the precious metals sector back up to critical resistance which is the first step in a new impulse leg higher. Keep in mind the markets generally move two steps forward and one step back during a good move up. Only when we reach the parabolic portion of the bull market is when we will see maybe five steps forward and one step back. So lets look at some of those important resistance rails, that we can keep an eye on for future reference.

Lets start with gold as it has actually penetrated the most important downtrend rail of what is looking more like a triangle consolidation pattern to the upside in black. The smaller blue triangle that has formed over the last 3 months or so is located in the best possible place to to offer it’s strength for a complete breakout of the much bigger year old black triangle. Also note the 300 dma, in red, that was also broken to the upside right at the top rail of the big black triangle. This is what you call killing two birds with one stone. If this is a true breakout the top black rail of the big triangle should not be violated on any backtest in the future.

The next chart I would like to show you is a daily line chart for the GLD. Line charts have their place in charting as they can identifying support and resistance zones. They can takeout a lot of noise that a bar chart some times exhibits. Line charts also do a good job of identifying double tops and bottoms that might be harder to see on a bar chart. With that said lets look at a one year line chart of the GLD that is showing the 158 area has held resistance from May of this year until it was decisively broken to the upside this week. If we have any weakness over the next week or two the 158 area on the GLD should now act as strong support. Basic Technical Analysis.

The weekly look at gold is showing the possible triangle that has been forming for close to a year now. Breakouts can take their time on occasions with alot of backing and filling around the breakout area. Then there are other times when a stock has a breakout gap and never look back. You never know for sure what type of breakout you’ll get until after some time has passed. As of today gold is testing the top blue rail of the blue triangle so what type of breakout we will get is still up in the air. Any type of breakout will be positive though. Note the RSI indicator at the top of the chart. When gold was in it’s last strong impulse leg higher, anytime the RSI fell down to the 50 area that launched the next leg higher. When the RSI finally broke below 50 is when we started our latest consolidation pattern. Also you can see where the RSI made a lower low, black dashed rail, and gold failed to follow through, that was a bullish sign for gold.

This last chart for gold is a long term 30 year look that puts our latest triangle consolidation pattern in perspective. You can see when gold finally left it’s big base it has produced one consolidation pattern ofter another. Our most recent triangle consolidation looks like it fits right in to the major uptrend that began in 2000. One last note on the chart below and that is the big neckline that runs through the center of the chart. We know that big neckline was hot by the way the price action traded at the breakout area in 2007. As you can see there was a nice red triangle that formed just below the big neckline. That told us gold was building up the energy to finally take out that 27 year neckline, which it did. What is more important is how the big neckline reversed it’s role and held support during the big stock market crash in 2008. Gold built a beautiful H&S consolidation pattern with the head portion testing the big 27 year neckline. So the breakout and backtest were complete which led to the biggest impulse run higher for the entire bull market to date.

Lets now turn our attention to silver and see how it has performed last week. On the chart below I’m labeling the bottom formation as a complex pattern because it is made up of three different chart patterns. The green pattern is the bear flag, the blue pattern is a bullish falling wedge and the most recent and most important pattern is the 5 point red triangle reversal pattern. By the close of trading on Friday silver closed above the June high. That is significant as Silver has now put in a higher high.

Lets now look at a two year chart for silver that starts to paint a bigger picture since the all time high at 50 in April of last year. As you can see on the chart below the price action took silver right up to the downtrend rail of a possible big triangle formation. The bottom rail of the big triangle has held support many times since the correction began in April of last year. You can see another big chart pattern that has formed since the initial crash down to the 26 1/12 area that started the flat bottom expanding triangle in blue. That pattern is similar to the gold big rectangle that I showed earlier. So silver is now testing the all important top rail of the triangle.

The 30 year chart of silver is a very beautiful chart technically speaking. Silver had two massive H&S bases stretching back to 1982. Note the red triangle that formed just below neckline #1. That red triangle was going to fuel the breakout once everything was in place. The rally that followed took silver form 8 to 20 before it was time for the next pull back. As with the big 30 year chart for gold that I showed you above, silver also had a crash that took prices all the back down to the breakout of neckline #1 around eight. From that backtest to neckline #1 silver went on to have it’s biggest rally of the bull market topping out close to 50 the1980 high. From there silver has been in a very strong correction that has take the price all the way back down to 26 or so where strong support has come in on every test. You can see the brown area is where I was looking for support at neckline #2 backtest around the 24 area. If our latest consolidation pattern does indeed takeout the top rail of the big triangle then the 24 support zone will most likely not be hit. Just for what its worth the big H&S #2 price objective comes in around the 132 area. Big bases big rallies.

Lets now look at the HUI as a proxy for the other precious metals stock indexes. The HUI is building out what could be a double bottom reversal pattern. At the top of the chart I’ve labeled the critical double bottom hump that the HUI needs to trade above to signal that the double bottom is in place. That comes in around the 465 area. As you can see by last weeks price action the HUI hit the top resistance zone on Thursday and sold off telling us that top rail is hot and is still holding resistance. After a small sell off on Friday the HUI is in the process of rallying back up to test the top rail again. At some point if we are truly embarking on the next impulse leg higher that 465 will be taken out and then it will reverse it’s role from resistance to support. The black and red arrows shows the smaller double top and bottom that have formed within the much bigger double bottom. I’ve labeled these two smaller reversal patterns as a 2 1/2 double top and double bottom. I know many of you out there are thinking “where did Rambus come up with the name for those pasterns?” I’ve seem these patterns form many times over the years but you won’t find them in any text book. The half bottom refers to the move after a breakout from the double bottom that quickly runs out of gas and declines back below the double bottom trendline about half the distance to the bottom. Note the 3 colored arrows that shows the top and bottom 2 1/2 patterns. The double tops and bottoms are still valid patterns its just that the backtest was stronger than normal creating the half part of the double top or bottom. You can also view the half part as a false breakout that doesn’t really materialize as it moves back below or above the horizon black dashed rails. There were probably alot of sell/stops that the market maker could see that he could catch before the rally began in earnest. That’s how alot of the long tails come about at tops and bottoms.

The next chart shows why we are now just starting to enter into some overhead resistance. There was a five point bearish falling wedge that gave way back in March of this year, red rectangle. That point represented the breakout. After bottoming out in May of this year the HUI rallied all the way back up to the underside of the bearish falling wedge where it ran out of gas and sold off again taking the price action back down toward the previous low. As you can see on the chart below the HUI as rallied all the way back up to the bottom blue rail again this week. Thursday it hit the bottom rail and sold off and Fridays action is starting what looks like another move higher to challenge the double bottom hump at 465. The most positive thing the HUI could do in here is takeout both the bottom and top rail of the bearish falling wedge that would have them reversing their roles from resistance to support.

Below is another chart that shows why the 465 area is critical resistance right now. There is a confluence of trendlines that intersect, right now at 465, red arrow.

The next chart is a weekly look that again shows why the 465 area is such critical resistance right now. I’ve added a long black dashed support and resistance rail that goes all the way back to the H&S top that was made back in 2008. As you can see it has worked its magic reversing it’s role from resistance at the 2008 high, red arrows,  to support at the neckline, green arrows. As you can see we are approaching the S&R rail again from the underside.

The next chart I would like to show you is a chart from the 2008 period and how similar that setup was compared to our most recent price action. First, the 2008 time frame shows the big H&S top that most couldn’t believe was taking place at the time. Only after the fact did it become apparent. What I want you to focus in on is the 2 1/2 double bottom that was created when prices were finally exhausted. You can see the half bottom formed abut halfway below the double bottom hump horizontal trendline. It didn’t hurt the double bottom pattern that actually reversed the downtrend but it gave a scare to the few technicians that were following the double bottom development. The rest is history as they say as the HUI went on to trade above 600 before it topped again.

The last chart I would like to show you is our most recent H&S top and the price action that followed the breakout. This is a comparison chart to the one above. I want to focus your attention to our current double bottom that is in the processing of building out. You may have to do a double take to make sure you aren’t looking at the 2008 double bottom. They are very similar looking.

So far last weeks rally in the precious metals complex moved the price action back up into critical resistance for the most part. It will be a very big  tell if and when the precious metals complex starts trading above all the overhead resistance rails that I have shown you in this article. With the dollar trying to top out in here a strong move lower will propel the precious metals and indexes through their critically important resistance rails and take away some of the over head resistance that has been in play for over two years now. This should get everyone caught up on where we are in regards to the precious metals 12 year bull market.    All the best….Rambus

EDITOR’S 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 Answeres .
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 .
To review his Work and incredible calls from the 2007-2008 period click on the top right sidebar in the “Wizard of Rambus” ….”What If !!” Post
To Follow Rambus Unique Unbiased Chart Work and participate in a Chartology Form with questions and answeres and learn the Art and Science and Mindset of a Pro Trader please Join us by subscribing monthly for $29.99 at
www.rambus1.com
We have many subscribers from all over the world who are glad they did as they enjoy the many daily updates and commentaries provided at this exciting new site
As you will see Rambus (Dave) has prepared us for this difficult period by being one of the only ones to see and warn about this incredibly debilitating PM smackdown as early as Jan 2 2012 …click on the” HUI Diamond in the Rough” Post in the “Wizard of Rambus” top right

And Now Rambus is Preparing us for a Potential Big PM Rally

Dont miss Rambus PM Portfolio of 20 of the Best Stocks which is in the process of being developed now

You will find Rambus to be a calm humble down home country tutor with an incredible repitoir of all the TA based protocols tempered with his own one of a kind style…simply put…He wants to keep his subscribers on the right side of these crazy volitile and downright dangerous markets
See you at the Rambus Chartology
…………………….

The HUI along with some of the other precious metals stock indexes are approaching some overhead resistance. The first chart I want to show you is a 4 month daily look that shows the HUI hitting the top horizontal resistance zone at 460 today. Initially you would expect a failure to occur right here as the bears see this as a place to go short or sell their positions. If the HUI is truly starting a new impulse leg higher its normal to see some backing and filling at overhead resistance. Whats important though is that after a few days or so the HUI rallies backup to the overhead resistance again attacking the bears. At some point, if this is a new impulse leg higher is for real, the bears will run out of ammunition and the bulls will overwhelm them in a big way and there will be a vacuum just above the horizontal resistance zone. The bulls will then run up to the next resistance zone where the same thing will happen again until there is no more overhead resistance. At that point the price action can move up more freely until the bears can mount another attack at higher prices.

The next  chart for the HUI shows the big 5 point blue bearish falling wedge that has been in place for close to a year now. As you can see on the chart below the HUI hit the bottom blue rail this morning at 460 and has bounced off. This tells us that bottom blue rail is HOT and the bears are in control for the time being. A break above that bottom blue rail will have the bears running for cover looking for the next logical place to put up some resistance which will probably be the top blue rail of the bearish falling wedge around 480 or so.

This last chart I want to show you is a one year and 3 month look at several of the big patterns that have formed over that period of time. The first pattern is the bearish falling wedge that I showed you on the chart above, in blue. Another important chart pattern is the downtrend channel that has been in play for the whole move down and the last pattern is the little red rectangle that formed right on the bottom blue rail of the blue falling wedge. You can see on the chart below how the bottom rail of the red rectangle has held resistance since the price action broke below it in April of this year. The red arrow shows you where we have a confluence of trendlines all intersecting at roughly the 465 area. This is why today’s action is alittle disappointing if one doesn’t understand how support and resistance works. This is perfectly normal behavior being displayed by the HUI. Keep in mind that once all this overhead resistance is taken out to the upside it will then reverse it’s role and act as support on any decline.

Tonight I would like to get you caught up on a few charts of gold I haven’t shown in awhile. As you well know we are finally getting some serious strength in gold that is moving the price action up and into some critically important resistance points around the 1660 area. Lets start with a daily gold chart so you can get a good overall picture of where we are and where we are likely to be going over the near to medium term.

The gold chart below shows the most important pattern that gold has been trapped in since last September when it made it’s initial break off the all time high at 1920. That first bottom, setup the first reversal point in the 265 point rectangle pattern, point #1. I’ve labeled the reversal points within the big rectangle with red numbers. The fifth reversal point was most important because it represented either a rectangle consolidation pattern to the downside or the 5th reversal point was making the rectangle a reversal pattern to the upside. Two very different outcomes. As of right now we can rule out the rectangle as a consolidation pattern to the downside and say its a 5 point rectangle reversal pattern to the upside. Until something changes that scenario this is the way we have to trade now.

There are still several more important things to look at, on the daily chart above, that helps let us know where we are relative to the last year of trading. On the shorter term look the 5 point red triangle reversal pattern is the most important chart pattern in play right now. As you can see on the chart above gold finally broke out of the 5 point morphing triangle yesterday with some nice follow through today.  We are now approaching two critical resistance points and they both intersect at roughly the1660 area. The first one is the horizontal thin dashed black center rail of the big rectangle and the other one is the 300 dma which came in today at 160.  After alittle backing and filling around the1660 area the red 5 point triangle strongly suggests gold in going up to test the top of the rectangle at 1795. For right now 1660 is the area to watch.

The weekly chart below shows again why the 1660 area might offer up some resistance before the gold price can work its way higher, green circle. We have the 65 week moving average that is now at 1657. Gold is also approaching the top rail of the downtrend channel that seemed so far away just a week or two  ago.  If gold can takeout the top black downtrend rail,  that will nullify another leg down within the downtrend channel and helps build a stronger case for the triangle consolidation pattern.

Another weekly chart shows the potential triangle forming that maybe coming to an end if gold can takeout the top blue rail. If you look at the other blue consolidation patterns you can see our current triangle looks very similar in time and price. So from that perspective our current blue triangle could be a mature pattern. Time will let us know if that is the case.

The last chart I would like to show you is a 30 year look at gold. When looking at the bull market that stared in 2000 our latest consolidation pattern looks like it fits right in as just another consolidation pattern in the ever growing bull market.

We know from looking at the charts above that the 1660 area represents some key resistance points gold will have to overcome to enter it’s next impulse leg higher. With the breakout of the 5 point triangle reversal pattern gold answered a few very important questions for us. Most importantly is that the bottom at 1530 is a very key support and will likely hold into the future. Also the breakout from the 5 point triangle strongly suggests that gold at a minimum is headed back up to the top of the rectangle at 1795. So now we wait and see how gold trades around the all important resistance area at 1660.   All the best…Rambus

EDITOR’S 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 Answeres .
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 .
To review his Work and incredible calls from the 2007-2008 period click on the top right sidebar in the “Wizard of Rambus” ….”What If !!” Post
To Follow Rambus Unique Unbiased Chart Work and participate in a Chartology Form with questions and answeres and learn the Art and Science and Mindset of a Pro Trader please Join us by subscribing monthly for $29.99 at
www.rambus1.com
We have many subscribers from all over the world who are glad they did as they enjoy the many daily updates and commentaries provided at this exciting new site
As you will see Rambus (Dave) has prepared us for this difficult period by being one of the only ones to see and warn about this incredibly debilitating PM smackdown as early as Jan 2 2012 …click on the” HUI Diamond in the Rough” Post in the “Wizard of Rambus” top right
You will find Rambus to be a calm humble down home country tutor with an incredible repitoir of all the TA based protocols tempered with his own one of a kind style…simply put…He wants to keep his subscribers on the right side of these crazy volitile and downright dangerous markets
See you at the Rambus Chartology
…………………….

GDX is the first PM stock index to reach it’s first important resistance zone at the bottom blue rail of the 5 point bearish falling wedge. A pause to refresh right here should be expected. With the US dollar breaking down from it’s top formation the odds are very good that the precious metals stock indexes should take out both of the overhead resistance rail on the 5 point bearish falling wedge. A close above the top blue rail will be a big deal when it happens. We are also closing the gap that was made on the open this morning.

DAG is a 2 X agricultural  etf that does a pretty good job tracking the grains. Several weeks ago I showed you this chart of DAG when I wrote about the risk off trade coming back. The red triangle has morphed alittle bit since then but with today’s action it looks like a clean breakout with a nice gap. I’m viewing the red triangle as a halfway pattern. At the top of the chart are two price objectives using two different measuring techniques. Notice the move off the bottom blue arrow to the top of the red triangle. This type of pattern should produce a move equal to the move off the bottom blue arrow at the bottom of the chart to the blue arrow at the top of the red triangle. The near vertical price action is called a flag pole with the red triangle forming at the halfway point. The MACD, at the bottom of the chart is getting ready to crossover and the RSI at the top of the chart has hit 50, red arrow. Alot of times when a stock is in a rally mode, and then has a correction, the RSI will only correct back down to the 50 area that will signal the correction is completing. Instruction on chart below.

A subscriber has asked me if I could take a look at this stock, Sandstorm Gold which is a gold Royalties company. The Gold Royalties companies are one of the strongest sectors within the precious metals complex.

Lets start with a daily chart that is showing a very nice uptrend.  After breaking out of the blue triangle in the first part of August, SAND then formed a small red bullish rising wedge that has broken out to the upside last Thursday. Its now approaching it’s all time highs.

The weekly look is showing a very encouraging bullish pattern that has yet to breakout. On the chart below you can see a possible bullish rising wedge in blue that is comprised of two smaller red triangle patterns. Note the MACD indicator, at the bottom of the chart, has now crossed over, green circle.

There isn’t alot of history yet on SAND but the monthly chart shows the three consolidation pattens that have formed since it came public.

I really like the fact that this stock along with the other Royalties companies are approaching new all time highs in a sector that has been beaten down the last year and a half or so. This is showing considerable strength in a weak sector.  I will probably be adding this one to the model portfolio in the next day or two. All the best…Rambus

A subscriber has asked me if I could look at these charts and see what they are saying. Lets start with a daily look at SLW that has just broken back above bottom rail of the bear flag. There was a nice increase in volume on the move back above the blue rail. That is a very encouraging sign. Notice how clean the price action is from the bottom blue rail of the bear flag. Above it has been support and below has been resistance. Lets see if it reverses it’s role again as support with a test, from the topside, back down to the 30 area as a backtest.

The weekly look is showing an uptrend channel that is forming off the 2008 crash low. Note the big blue bull flag with 5 completed reversal point with the 6th in progress. A touch of the top blue rail will complete the 6th reversal point. At that point we will have a consolidation pattern. It just needs to break through the top blue rail to confirm the huge bull flag.

This next weekly chart is probably my favorite look at SLW. On the left side of the chart you can see the multiple inverse H&S bottoms. Necklines never die they just slowly fade away. As you can see I extended both necklines to the right side of the chart looking for some support. The top neckline was backtested in May of this year where SLW tested it as support for several months before finally lifting up about 4 weeks ago.

The monthly chart takes out all the noise and leaves a clear picture of the bull flag.

Lets now turn our attention to AUY which has been a fairly strong performer during this latest precious metals correction. The daily chart shows you a good example of how support and resistance works. Note all tops on the left side of the chart, blue arrows. Note how once the price action got above that resistance zone it reversed it’s role and has held support for a year now, green arrows.

The weekly look is showing a possible running correction or bullish rising wedge pattern. This pattern has been forming for 2 1/2 years now with 5 completed reversal points with the 6th in progress. Its critical that the bottom blue rail of the possible bullish rising wedge holds as support otherwise it could be a reversal pattern. So far so good.

The monthly look shows the rising wedge. The bottom rail of the rising wedge comes in around the 13.60 area which would be a good low risk entry point using the bottom rail as your line in the sand.

The last set of charts I want to show is the weekly look at the CDNX small cap index. As you can see on the chart below the CDNX has been trading below the big neckline for several months now. To get this chart back to neutral the price action needs to trade back above the neckline. This chart tells us the juniors still haven’t made a significant move up yet but just marking time over the last several months or so.

Lets see how the CDNX has been performing to gold. Looking at the monthly chart we can see the CDNX has been really under performing gold in a huge way. This ratio in now at its lowest level in history slightly trading below the 2008 crash low, red circle. If one is a bargain hunter this might represents a good long term buy area. The only real positive thing about this chart is the positive divergence that is taking place on the RSI indicator at the top of the chart.

Lets look at one more ratio chart where we compare the CDNX to the HUI and see how the small caps have been fairing against the big caps. This ratio chart is just a tad better than the CDNX to the gold ratio chart. As you can see it’s at least trading above the two previous lows from the 2008 crash and the most recent low made last year. There is a positive divergence forming on the RSI and the MACD indicators.

I hope this in depth look at the charts above puts things into perspective for you. The little juniors are still not showing much life yet which could change once the price of gold and silver finally breakout of their respective consolidation patterns. For right now selected buy of the juniors seems like a prudent thing to do. At some point they will come a live in a big way and that will be the time to back up the truck.

…………………………..

EDITOR’S 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 Answeres .
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 .
To review his Work and incredible calls from the 2007-2008 period click on the top right sidebar in the “Wizard of Rambus” ….”What If !!” Post
To Follow Rambus Unique Unbiased Chart Work and participate in a Chartology Form with questions and answeres and learn the Art and Science and Mindset of a Pro Trader please Join us by subscribing monthly for $29.99 at
www.rambus1.com
We have many subscribers from all over the world who are glad they did as they enjoy the many daily updates and commentaries provided at this exciting new site
As you will see Rambus (Dave) has prepared us for this difficult period by being one of the only ones to see and warn about this incredibly debilitating PM smackdown as early as Jan 2 2012 …click on the” HUI Diamond in the Rough” Post in the “Wizard of Rambus” top right
You will find Rambus to be a calm humble down home country tutor with an incredible repitoir of all the TA based protocols tempered with his own one of a kind style…simply put…He wants to keep his subscribers on the right side of these crazy volitile and downright dangerous markets
See you at the Rambus Chartology