Best of the Week
Most Popular
1.The Brexit War! EU Fearing Collapse Set to Stoke Scottish Independence Proxy War - Nadeem_Walayat
2.London Terror Attack Red Herring, Real Issue is Age of Reason vs Religion - Nadeem_Walayat
3.The BrExit War, Game Theory Strategy for What UK Should Do to Win - Nadeem_Walayat
4.Goldman Sachs Backing A Copper Boom In 2017 - OilPrice_Com
5.Trump to Fire 50 US Cruise Missiles To Erase Syrian Chemical Attack Air Base, China Next? - Nadeem_Walayat
6.US Stock Market Consolidation Time - Rambus_Chartology
7.Stock Market Investors Stupid is as Stupid Goes - James_Quinn
8.Gold in Fed Interest Rate Hike Cycles- Zeal_LLC
9.The BrExit War - Britain Intelligence Super Power Covert War With the EU - Nadeem_Walayat
10.Marc Faber: Euro to Strengthen, Dollar to Weaken, Gold and Emerging Markets to Outperform - MoneyMetals
Last 7 days
Bifurcated US Stock Market - 29th Apr 17
Damn the Deficits, Huge Trump Tax Cuts Ahead! - 29th Apr 17
Gold Hostage to Stocks - 29th Apr 17
Warren Buffett Hates Gold… But Here’s Five Reasons You Need To Own It - 29th Apr 17
Stock Market Sentiment, Re-Fueled Along the Way - 28th Apr 17
Calling out the Central Bankers - 28th Apr 17
Fed's Third Inetrest Rate Hike and Gold - 28th Apr 17
USD/CAD - Invalidation of Breakout or Further Rally? - 28th Apr 17
What Happened to the Stock Market Crash Experts Were Predicting - 28th Apr 17
Earth Overshoot Day - Human Population Growth - 28th Apr 17
Misunderstanding GDXJ: Why It’s Actually Great News For Junior Miners - 28th Apr 17
What Makes Bitcoin Casinos So Remarkable? - 28th Apr 17
Financial Markets Improvised Explosives - 27th Apr 17
More Stock Market Short-Term Uncertainty As Stocks Get Close To Record High - 27th Apr 17
Elliott Wave Theory: Is Elliott’s Theory Enough? - 27th Apr 17
Billionaire Investor Paul Tudor Jones Says Stock Market Valuation Is “Terrifying” And He Is Right - 26th Apr 17
The Great BrExit Divides - Britain, USA and France - 26th Apr 17
10 Facts That Show Our Taxes Are Worse Than You Thought - 26th Apr 17
What Trump’s Next 100 Days Will Look Like - 26th Apr 17
G20: SURPASSING THE 2nd GLOBAL STEEL CRISIS - 26th Apr 17
What A War With North Korea Would Look Like - 25th Apr 17
Pensions Are On The Way Out But Retirement Funds Are Not Working Either - 25th Apr 17
Frank Holmes : Gold Could Hit $1,500 in 2017 Amid Imbalances & Weak Supply - 25th Apr 17
3 Reasons Why “Spring Forward, Fall Back” Also Applies To Gold - 25th Apr 17
SPX may be Aiming at the Cycle Top Resistance - 25th Apr 17
Walmart Stock Extending Higher - Elliott Wave Trend Forecast - 25th Apr 17
Google Panics and KILLS YouTube to Appease Mainstream Media and Corporate Advertisers - 25th Apr 17
Gold Price Is 1% Shy of Ripping Higher - 25th Apr 17
Exchange-Traded Funds Make Decisions Easy - 25th Apr 17
Trump Is Among The Institutionally Weakest National Leaders In The World - 25th Apr 17
3 Maps That Explain the Geopolitics of Nuclear Weapons - 25th Apr 17
Risk on Stock Market French Election Euphoria - 24th Apr 17
Fear Campaign Against Americans Continues Nuclear Attack Drills in New York City - 24th Apr 17
Is the Stock Market Bounce Over? - 24th Apr 17
This Could Be One Of the Biggest Winners Of The Electric Car Boom - 24th Apr 17
Le Pen Shifts Political Landscape- The Rise of New French Gaullism  - 24th Apr 17
IMF Says Austerity Is Over - Surplus or Stimulus - 24th Apr 17
EURUSD at a Critical Point in Wave Structure - 23rd Apr 17
Stock Market Grand Super Cycle Overview While SPX Correction Continues - 23rd Apr 17
Robert Prechter Talks About Elliott Waves and His New Book - 23rd Apr 17
Le Pen, Melenchon French Election Stock, Bond and Euro Markets Crash - 22nd Apr 17
Why You Are Not An Investor - 22nd Apr 17
Gold Price Upleg Momentum Building - 22nd Apr 17
Why Now Gold and Silver Precious Metals? - 22nd Apr 17
4 Maps That Signal Central Asia Is at Risk of War - 22nd Apr 17
5 Key Steps For A Comfortable Retirement From Former Wall Street Trader - 22nd Apr 17

Market Oracle FREE Newsletter

Why 95% of Traders Fail

Gold and Silver Stocks Game Plan

Commodities / Gold and Silver Stocks 2015 Jul 09, 2015 - 12:55 PM GMT

By: Rambus_Chartology

Commodities

Tonight I would like to update you on some precious metals charts we've been following very closely to shed some light on where we're at and where we maybe heading. When investing in the markets we need to have a game plan to follow so that we know when the game changes we have to change. As long as the game plan is working you stick with it until you've reached your price objectives or the trend changes.

Believe me it's not at all easy to follow a game plan. There are things that happen to a stock or market on a daily basis, that we have no control over, that can affect our thinking. Without a game plan to follow we are at the mercy of every little wiggle a stock makes. One has to have a certain amount of confidence in whatever trading system they use to be able to ride out the wiggles that can whipsaw you to death if you act on every move a stock makes.


Getting the initial position to stick is one of the hardest things to do because it's impossible to buy the absolute bottom. A stock or market will move two steps forward and one step back in an uptrend. It's that one step back that tends to get you if you didn't buy the actual low. So usually, at the beginning of a trade, many times you'll find yourself with a small loss to deal with. If you got the trend right it will generally fix itself and your small loss will finally turn into the gain you're originally looking for.

Lets now look at some precious metals stocks to see if our original game plan is still working. Below is a chart for the $BPGDM that shows the GDX on top and the BPGDM on the bottom. The last time I showed you this combo chart the GDX still hadn't broken the neckline yet and the BPGDM chart on the bottom was stuck at 23.33 I believe. As you can see the GDX has broken below its neckline and the BPGDM has moved lower and is now trading at 16.67 which means that only 16.67% of gold mining stocks, on a point and figure chart, are on a buy signal. Note the alinement that now shows the BPGDM is leading the way lower with the faster 5 dma next and the 8 dma last. This is the setup you want to see in a downtrend.

Gold Miners Bullish Percent Daily Chart

The next chart is a long term daily look at the CDNX index which was just starting to break below the bottom rail of the blue triangle consolidation pattern the last time we looked at it. As you can see it's now starting to pick up some steam to the downside confirming the small caps are in trouble.

CDNX Daily Chart

This next chart is a daily look at the GDM which shows the combo triangle / H&S consolidation pattern that started to form at the November low from last year. It's easy to see in hindsight now how all the pieces of the puzzle fit together. Note the breakout from the triangle, black solid trendline, eight days ago was quickly followed by the breakout below the neckline three days later. This past Monday was the backtest day that tested the neckline. This chart shows you the game play we've been following since May which is still working according to the Chartology. If for some unexpected reason the price action starts trading above the neckline and the bottom rail of the black rectangle then the game plan will have changed and I will have to adapt to what the chart is saying at that time. So far so good.

Gold Miners Index Daily Chart

The indicator chart shows all the inductors are bearish at this time.

Gold Miners Index Daily Chart 2

Some of you may remember this daily chart for GDM which is showing the blue morphing rising wedge that caused a little trouble back when it was forming. The red marks shows how it morphed into a slightly larger bearish rising wedge with a false breakout of the top dashed trendline and then an equal false breakout of the bottom dashed trendline that represents the original bearish rising wedge. The solid blue trendlines ended being the pattern I was looking for. Note the breakout through the bottom rail of the blue bearish rising wedge and the backtest that lasted about a week before the price action began to decline in earnest. That little move helped confirm the game plan for me at the time. It looks just like another little wiggle to most folks but for me it was a serious piece of the puzzle.

Gold Miners Index Daily Chart 3

Below is a long term daily line chart that shows gold on top and silver on the bottom. The black dashed trendline down at the bottom right hand side of the chart finally shows silver cracking that important trendline / NL while gold is still testing its own black dashed trendline. It has taken awhile but this chart is still confirming the game plan. There is still a lot of room for the RSI indicator at the top of the chart to move lower.

Spot Gold Daily Chart

Below is a daily chart for gold that shows its most important moving averages which are all above the most recent price action confirming the game plan. If we were to see gold start trading above some of these important moving averages then I would have to start to reconsider the game plan but for now there is nothing broken.

Spot Gold Daily Chart 2

This next chart for gold shows the downtrend channel I've been trying to show you once a week so that you can follow the Chartology as it's developing in real time. The black and red rectangles measures time and price for each impulse move. I've been saying that I would like to see the price action testing the bottom rail of the blue bearish falling wedge by the middle of July. The reason for that is because that is when gold broke below the bottom rail of it big six point blue rectangle back in 2013 and the red rectangle measured that impulse move down. The red rectangle at the bottom right hand side of the chart is the exact same size that shows where we may look for a low in time and price. It's not mandatory that gold hits the bottom rail of the blue falling wedge in the middle of July but time wise it would be some nice symmetry if it did.

Spot Gold Weekly Chart

I've been showing you this long term monthly chart for gold shortly after it broke down from the bearish expanding rising wedge almost two years ago. Longer term members may remember when I added the neckline extension rail that is taken from the 2008 H&S consolidation pattern and extended it out in time to the right hand side of the chart. The symmetry was just too pretty to ignore as shown by the neckline symmetry rails. They're all the exact same angle which shows the bottoms of the left and right shoulders of the 2008 H&S consolidation pattern, which is also the same angle for the neckline, which also shows the highs for the left and right shoulders of the massive H&S top and its neckline. The breaking and backtesting process has been going on for close to a year now but this is a massive H&S top that is in play as big patterns take a lot time to develop. Now it's getting time for gold to break to new lows since its bear market began in September of 2011. That will confirm the game plan.

Spot Gold Monthly Chart

I don't show Platinum very often but it's part of the game plan. Below is a long term monthly chart that shows its multi year blue rectangle. It then formed the smaller red rectangle and is now making new yearly lows.

Monthly Platinum Chart

Platinum weekly chart.

Weekly Platinum Chart

This next chart is a daily line chart for silver that shows it breaking below its neckline. If you look really close you can see a tiny little backtest to the neckline. It's possible we see another backtest to the neckline but the fact that it has broken below the neckline tells us we're on the right track.

Daily Silver Chart

As with gold silver to has a massive H&S top in place. It too has some very nice symmetry as show by the neckline symmetry rail which shows the height for the left and right shoulders. My game plan is to shoot for the brown shaded support and resistance zone. If silver makes it that low I'll be satisfied.

Monthly Silver Chart

I have many more charts I could show you but I would like to end this Wednesday report by looking at the GDXJ. Below is the two hour chart we've been following that shows the blue bearish rising wedge with a H&S top.

Market Vectors Junior Gold Miners 2-Hour Chart

Below is a long term daily chart which shows the previous consolidation pattern, the bearish rising wedge at the top of the chart. The H&S top I showed you on the two hour chart above is the fourth reversal point in the new bearish falling wedge at reversal point #4. Note the impulse move down from the blue bearish rising wedge at the top of the chart that also had a H&S top at its fourth reversal point. Our current blue bearish falling wedge would give us a price objective down toward the 12 area as shown by the blue arrows.

Market Vectors Junior Gold Miners Daily Chart

This long term monthly chart shows how our current blue bearish falling wedge fits into the bigger picture.

Market Vectors Junior Gold Miners Weekly Chart

When you look at all the individual precious metals stocks I've been posting that are breaking out from their seven month consolidation patterns along with these charts above the game plan is still clearly in affect. It's possible it could change at anytime but until that time comes I have to go with the game plan that has been working.

All the best

Gary (for Rambus Chartology)

http://rambus1.com

FREE TRIAL - http://rambus1.com/?page_id=10

© 2015 Copyright Rambus- 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.

Rambus Chartology Archive

© 2005-2016 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

Catching a Falling Financial Knife