I have been showing the triangle pattern that has 5 reversal points making it a reversal pattern once we broke thru the bottom rail. Last Friday we had the backtest to the bottom rail of the triangle. It looks like it was successful as today we are testing the next support rail down at 11,600. If the Dow closes below 11,600 I would view that a strong negative.
Dow daily triangle breakout and backtest. Testing 11,600.
The Dow has clearly broken the bottom rail of the triangle strongly suggesting it is a reversal pattern. There is a S&R rail about 100 points down at 11,600 that will be the last area of decent support. A break of that rail will put the whole intermediate uptrend in question.
Dow daily triangle breakout.
I want to show a daily chart of the SPX as it has a slightly different pattern. The brown area at the top of the congestion zone should theoretically act as support as it has done twice so far after breaking out above the resistance zone. You can clearly see we have been chopping between the big neckline from the H&S top formation and the brown area that was resistance and should now be support. The 50 dma comes in at 1205 just about at today’s lows.
SPX testing support, brown resistance zone, from the topside.
NovaGold has finally broken out of an almost one year bullish expanding falling wedge pattern. The heavy volume that is accompanying the breakout is extremely positive. This breakout is textbook in that we have a nice long bar on heavy volume taking out a one year resistance rail.
NG daily breakout.
Today I want to show another model portfolio stock Richmont Mines that is sitting just beneath it’s all time highs. Below is a one year chart showing 2 H&S consolidation patterns that makeup it’s recent uptrend. The lower H&S consolidation pattern formed during the usually slow summer months and broke the neckline in August signaling the H&S was complete. Notice that once we broke through the neckline, that had been resistance, we had 3 backtests that were all successful. The neckline was now acting as support. The last critical backtest occurred in October and the neckline held on a capitulation spike that marked the low. From there RIC rallied up to make new all time highs, where the second H&S consolidation pattern formed. Again notice how the neckline, once broken to the upside, held support on the backtest.
RIC.TO daily H&S consolidation patterns.
Now on to the weekly look showing a beautiful bullish rising wedge consolidation pattern. You can see how the top rail of the bullish rising wedge held resistance during it’s two year development. Once the top blue rail of the bullish rising wedge was broken to the upside it held as support that was instrumental in the creation of the lower H&S consolidation pattern that I showed on the daily chart. The backtest ended up being support for the head.
RIC.TO weekly bullish rising wedge.
The monthly look really brings into focus just how bullish Richmont Mines is on the longer term chart. Unlike most precious metals stocks RIC.TO brokeout to new all time highs in April of this year while most PM stocks have lagged badly. Notice the top back dashed rail and how it worked it’s magic going from resistance to support once it was broken to the upside. Richmont Mines appears to be one of the leading precious metals stocks that will be a leader once the next impulse leg up gets started in earnest.
RIC.TO monthly look.
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