Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Stock Market Deviation from Overall Outlook for 2020 - 22nd Feb 20
The Shanghai Composite and Coronavirus: A Revealing Perspective - 22nd Feb 20
Baltic Dry, Copper, Oil, Tech and China Continue Call for Stock Market Crash Soon - 22nd Feb 20
Gold Warning – This is Not a Buying Opportunity - 22nd Feb 20
Is The Technology Sector FANG Stocks Setting Up For A Market Crash? - 22nd Feb 20
Coronavirus China Infection Statistics Analysis, Probability Forecasts 1/2 Million Infected - 21st Feb 20
Is Crude Oil Firmly on the Upswing Now? - 20th Feb 20
What Can Stop the Stocks Bull – Or At Least, Make It Pause? - 20th Feb 20
Trump and Economic News That Drive Gold, Not Just Coronavirus - 20th Feb 20
Coronavirus COVID19 UK Infection Prevention, Boosting Immune Systems, Birmingham, Sheffield - 20th Feb 20
Silver’s Valuable Insights Into the Upcoming PMs Rally - 20th Feb 20
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Gold Miners Index: Domed House and Three Peaks Chart Pattern

Commodities / Gold and Silver Stocks 2014 Apr 08, 2014 - 10:03 AM GMT

By: Trader_MC

Commodities

The Miners Index has made a perfect Domed House and Three Peaks Chart Pattern. This pattern, discovered by a stock market analyst, George Lindsay, can be found in multiple timeframes. On the following charts you can see the model of the Lindsay’s Domed House and Three Peaks Pattern, as well as the current chart of the Miners Index (HUI). You can notice that the HUI Index has made a perfect Domed House and Three Peaks Pattern during these last ten years.


On the right side of the HUI Patterns Big Picture chart you can see that the three peaks (3-5-7) were followed by two strong waves decline into point 10. This down move defined the “separating decline” as prices separate the Three Peaks from the rest of the formation. Point 10 returned to point 28 and prices rebounced strongly on the Symmetry Guide Line as they normally do.

You can also notice that the Domed House Pattern (275 weeks) lasted almost for exactly the same period as the Three Peaks Pattern (269 weeks). The Domed House and Three Peaks Pattern is now complete as final point 10 returns to points 28-1 level. I have been following this pattern for a long time and it is important to monitor such chart formation as it plays an important role in the market.

Lindsay Domed House and 3 Peaks chart Pattern

HUI DOMED HOUSE AND 3 PEAKS CHART PATTERN APR 7

As you can see, both the Domed House and the Three Peaks Patterns have violent up moves, followed by strong reversals. In order to understand how the market works, it is important to keep in mind that all markets return to the mean. On the charts below you can see that the HUI Index, the Gold/XAU ratio and the SPX are far stretched from the 65 Monthly Moving Average. Every time it happened in the past, it generated a violent regression move which is a normal reaction for a market that has been too extreme. (I also included the Bonds and the Commodities charts as additional examples.) These charts are suggesting that odds favor an upside move for the Miners and a correction for the SPX Index on the intermediate term trend.

HUI MA 65 MONTHLY APR 7

The next chart shows that the Gold/XAU ratio has reached its Base Pattern target and has a lot of downside potential. The vertical moves show how badly the Miners have performed to Gold these last two years. A regression to the mean may result in a violent down move and the Precious Metal stocks could strongly outperform the Gold Metal.

GOLD XAU RATIO CHART APR 7

Here is another chart of the HUI Index where you can see that prices are between the two major parallel trend lines. The false breakdown last December looks like a bear trap and could have been a Multi-Year Cycle Low as it was late in the timing band for the HUI to print a Yearly Cycle Low. The lower blue trend line of the primary channel is still acting as a resistance and needs to be monitored closely. If prices go back into the blue channel, it would be a bullish sign for Miners.

HUI BIG PICTURE APR 7

Next is the Miners/Bonds ratio chart. You can see that the HUI/USB ratio rebounced on a strong support and broke out of a falling wedge. Miners are outperforming Bonds and I expect more and more investors to leave the Bonds sector and to come into Miners during the coming months.

MINERS BONDS RATIO CHART APR 7

It is also interesting to keep an eye on the HUI/SPX ratio chart. Once a breakout of the resistance trend line occurs, Miners will be more attractive for the investors than the SPX Index. The HUI/SPX ratio got rejected right on the resistance trend line last month but the next attempt could be a successful one.

HUI SPX RATIO CHART APR 7

Irrationally low prices are the greatest opportunities for the investors, as all markets return to the mean. For the moment, I think that we have a decent bottom in place but nobody can predict the markets with 100% accuracy as they are irrational and like to push things to the extreme. I therefore cannot rule out the possibility of one more down move in Miners – in order to bring extreme pessimism – but if it happens then I expect it to be very brief, as the regression to the mean forces should play out and that would result in a great buying opportunity.

Trader MC
Company: Cycle Trader MC OU
Web site: http://tradermc.com
Email: contact@tradermc.com

My analysis covers different assets – Market Indexes, such as US, Europe, Emerging Markets, China, Russia etc., Commodities, Currencies (Forex Trading), Bonds and Rates. In addition to the Markets Updates for MC Members, I also post real-time Trading Alerts for MC Leveraged Members for a more aggressive strategy in all the sectors. Besides the market analysis, this site also contains Cycles Count Updates for all Market Assets, including the Forex Market.

© 2014 Copyright Trader MC - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules