• 16 hours Will Bezos Buy The Seattle Seahawks?
  • 23 hours 6 Tech Trends Transforming The Travel Industry
  • 2 days Ousted Uber CEO Cashes Out $500 Million In Stock
  • 2 days Trump Prepares For Another Key Tariff Decision
  • 2 days The Free Money Bubble Is About To Burst
  • 3 days The Crushing Reality Of Poverty In America
  • 3 days Should You Buy Into The World’s Largest IPO?
  • 3 days The Infinite Possibilities Of Cosmic Energy
  • 4 days Analysts Link Walking To Economic Growth
  • 5 days Will Japan Turn Its Back On The Aramco IPO?
  • 6 days Global Debt Soars To $188 Trillion
  • 6 days The World's Largest Gold Miners Are Getting Creative
  • 7 days Twitter: The Saudi Spy Tool To Bring Down Dissidents
  • 7 days Broad Commodity Funds Don’t Give Enough Exposure To Gold
  • 8 days Here We Go Again: Another Giant Telecoms Mega-Merger
  • 8 days World's Largest Gold Miner Sees Profits Triple
  • 9 days Microsoft Japan Trials 4 Day Work Weeks, Productivity Soars By 40%
  • 9 days Hedge Funds Lose $4 Billion In Four Days As California Wildfires Rage On
  • 10 days New Viral App May Be A National Security Threat In Disguise
  • 10 days China's $10 Trillion Space Play
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Rambus Chartology

Rambus Chartology

Rambus Chartology

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…

Contact Author

  1. Home
  2. Markets
  3. Other

Gold Stocks: Be Prepared

There are two patterns I'm watching very closely in here on the HUI which will be a proxy for the rest of the PM stock indexes. This first chart is daily chart which shows the three small consolidation patterns that have formed since the January low. The top pattern basically completed its fourth reversal point today which is an expanding falling wedge. One of two things will most likely happen tomorrow. If this is the correct consolidation pattern then we will most likely see a breakout gap above the top rail which should lead to the next impulse move up. The second scenario would be to see the top rail hold resistance and a move down to the bottom rail of the expanding falling wedge where the 38% retrace would come into play around the 183 area. This pattern is complete except for the breakout.

HUI Gold Bugs Index Daily Chart
Larger Image

Below is another daily chart we've been following which shows a possible bigger consolidation area forming with the second reversal point coming into play at the top of the trading range. If and that is a big if, if the top of the trading range does hold resistance then we'll need to see one more decline toward the bottom of the trading range to complete the 3rd reversal point, which would then setup the all important area to begin the fourth reversal point back up to the top of the trading range to complete whatever consolidation pattern develops. We won't know what pattern we have until we have the four reversal points in place. As bullish as this sector seems right now it's hard to imagine that big gap getting filled but it's a possibility. There are no laws though that says the gap has to get filled, it's just that most of the time they do get filled at some point.

HUI Gold Bugs Index Daily Chart 2
Larger Image

This next daily chart for the HUI would be the most bullish pattern we could ask for. The initial rally that began at the January low to the April high could be called a flag pole. Whatever consolidation pattern we get starting from the April high would be called the flag. The blue trendlines shows the two most likely patterns that may form the flag. I've also added a horizontal dashed line at the top and bottom of the trading range that would show a rectangle. So there is a possible triangle, falling flag or rectangle that could form the flag. The most important thing to watch right now is what happens up here at the top of the trading range.The blue arrows would measure the halfway point from where ever the last reversal point takes place in the bull flag. The higher the last reversal point the higher the price objective.

If the HUI gaps up big tomorrow morning then the first chart we looked at, the expanding falling wedge, will most likely be the next consolidation pattern that leads the next impulse move up. The bottom line is to be prepared for either scenarios.

HUI Gold Bugs Index Daily Chart 3
Larger Image

I've been watching the $CDNX for clues also, which may have given us a big one today. I wanted to wait for the end of the day to see if the price action held above the top rail of its small blue rising wedge. It did and closed at the high for the day. The blue bullish rising wedge would equate to the first pattern we looked at on the HUI which was the falling expand wedge.The blue arrows measures the first impulse move up that was separated by the bullish expanding rising wedge as the halfway pattern. The red arrows measures the second impulse move up if the blue bullish rising wedge works out as a halfway pattern. The rally would probably last four to five weeks before the price objectives are reached. Again have your favorite PM stocks ready to go in case this scenario plays out.

S&P/TSX Venture Composite Index Daily Chart
Larger Image

 

Back to homepage

Leave a comment

Leave a comment