Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Silver and the Yield Curve Inversion - 23rd Sep 19
Comparing Gold Producers to Main Stream Stocks - 23rd Sep 19
The Incredible World of Gold Stock Chartology - 23rd Sep 19
The Hottest Sports Stock Of 2020 - 23rd Sep 19
Stocks Wedge At The Edge – Front And Center - 23rd Sep 19
Stock Market Top Almost Confirmed - 23rd Sep 19
Thomas Cook COLLAPSE! 300,000 Passengers Stranded, Flights Cancelled, Planes Grounded - 23rd Sep 19
Massive Stock Market Price Reversion May Be Days or Weeks Away - 22nd Sep 19
How Russia Seized Control of the Uranium Market - 22nd Sep 19
Dow Stock Market Trend Forecast Update - 21st Sep 19
Is Stock Market Price Revaluation Event About To Happen? - 21st Sep 19
Gold Leads, Will the Rest Follow? - 21st Sep 19
Are Cowboys Really Dreaming of... Electric Trucks? - 21st Sep 19
Gold among Negative-Yielding Bonds - 20th Sep 19
Panicky Fed Flooding Overnight Markets with Cash - 20th Sep 19
Uber Stock Price Will Crash on November 6 - 20th Sep 19
Semiconductor Stocks Sector Market & Economic Leader - 20th Sep 19
Learning Artificial Intelligence - What is a Neural Network? - 20th Sep 19
Precious Metals Setting Up Another Momentum Base/Bottom - 20th Sep 19
Small Marketing Budget? No Problem! - 20th Sep 19
The Many Forex Trading Opportunities the Fed Day Has Dealt Us - 19th Sep 19
Fed Cuts Interest Rates and Gold Drops. Again - 19th Sep 19
Silver Still Cheap Relative to Gold, Trend Forecast Update Video - 19th Sep 19
Baby Boomers Are the Worst Investors in the World - 19th Sep 19
Your $1,229 FREE Tticket to Elliott Market Analysis & Trading Set-ups - 19th Sep 19
Is The Stock Market Other Shoe About To Drop With Fed News? - 19th Sep 19
Bitcoin Price 2019 Trend Current State - 18th Sep 19
No More Realtors… These Start-ups Will Buy Your House in Less than 20 Days - 18th Sep 19
Gold Bugs And Manipulation Theorists Unite – Another “Manipulation” Indictment - 18th Sep 19
Central Bankers' Desperate Grab for Power - 18th Sep 19
Oil Shock! Will War Drums, Inflation Fears Ignite Gold and Silver Markets? - 18th Sep 19
Importance Of Internal Rate Of Return For A Business - 18th Sep 19
Gold Bull Market Ultimate Upside Target - 17th Sep 19
Gold Spikes on the Saudi Oil Attacks: Can It Last? - 17th Sep 19
Stock Market VIX To Begin A New Uptrend and What it Means - 17th Sep 19
Philippines, China and US: Joint Exploration Vs Rearmament and Nuclear Weapons - 17th Sep 19
What Are The Real Upside Targets For Crude Oil Price Post Drone Attack? - 17th Sep 19
Curse of Technology Weapons - 17th Sep 19
Media Hypes Recession Whilst Trump Proposes a Tax on Savings - 17th Sep 19
Understanding Ways To Stretch Your Investments Further - 17th Sep 19
Trading Natural Gas As The Season Changes - 16th Sep 19
Cameco Crash, Uranium Sector Won’t Catch a break - 16th Sep 19
These Indicators Point to an Early 2020 Economic Downturn - 16th Sep 19
Gold When Global Insanity Prevails - 16th Sep 19
Stock Market Looking Toppy - 16th Sep 19
Is the Stocks Bull Market Nearing an End? - 16th Sep 19
US Stock Market Indexes Continue to Rally Within A Defined Range - 16th Sep 19
What If Gold Is NOT In A New Bull Market? - 16th Sep 19
A History Lesson For Pundits Who Don’t Believe Stocks Are Overvalued - 16th Sep 19
The Disconnect Between Millennials and Real Estate - 16th Sep 19
Tech Giants Will Crash in the Next Stock Market Downturn - 15th Sep 19
Will Draghi’s Swan Song Revive the Eurozone? And Gold? - 15th Sep 19
The Race to Depreciate Fiat Currencies Is Accelerating - 15th Sep 19
Can Crypto casino beat Hybrid casino - 15th Sep 19
British Pound GBP vs Brexit Chaos Timeline - 14th Sep 19
Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - 14th Sep 19
War Gaming the US-China Trade War - 14th Sep 19
Buying a Budgie, Parakeet for the First Time from a Pet Shop - Jollyes UK - 14th Sep 19
Crude Oil Price Setting Up For A Downside Price Rotation - 13th Sep 19
A “Looming” Recession Is a Gold Golden Opportunity - 13th Sep 19
Is 2019 Similar to 2007? What Does It Mean For Gold? - 13th Sep 19
How Did the Philippines Establish Itself as a World Leader in Call Centre Outsourcing? - 13th Sep 19
UK General Election Forecast 2019 - Betting Market Odds - 13th Sep 19
Energy Sector Reaches Key Low Point – Start Looking For The Next Move - 13th Sep 19
Weakening Shale Productivity "VERY Bullish" For Oil Prices - 13th Sep 19
Stock Market Dow to 38,000 by 2022 - 13th Sep 19 - readtheticker
Gold under NIRP? | Negative Interest Rates vs Bullion - 12th Sep 19
Land Rover Discovery Sport Brake Pads and Discs's Replace, Dealer Check and Cost - 12th Sep 19
Stock Market Crash Black Swan Event Set Up Sept 12th? - 12th Sep 19
Increased Pension Liabilities During the Coming Stock Market Crash - 12th Sep 19
Gold at Support: the Upcoming Move - 12th Sep 19
Precious Metals, US Dollar, Stocks – How It All Relates – Part II - 12th Sep 19

Market Oracle FREE Newsletter

How to Invest in the Esports Revolution

Gold …Some Confirmations to Watch For

Commodities / Gold & Silver 2019 Mar 21, 2019 - 03:11 PM GMT

By: Rambus_Chartology

Commodities

With the UUP ( US Dollar ETF) having a fairly large decline today lets update a few charts to see how they’ve been progressing. Back in August of last year the UUP began to build out a rising wedge formation with today’s price action completing the fourth reversal point when the UUP traded down to the bottom trendline. Sometimes when a stock fails to touch the top rail in a well defined pattern like the rising wedge the UUP is showing, it can be a warning sign that the energy just isn’t there and the stock has run out of gas. To complete the rising wedge we need to see the bottom rail give way which should usher in a strong move for the PM complex and I would think commodities in general.


The last time I showed you this daily chart for the UUP I suggested there was something for both the bulls and bears alike. Since the February 2018 low the UUP has been building out a parallel uptrend channel which I labeled as a new uptrend channel. The UUP can correct all the way down to the bottom rail of the uptrend channel and still be in a bull market. It’s very hard to predict the future but one scenario I could envision is that while the UUP corrects within its 2018 uptrend channel the PM complex can experience a big move to the upside. Whenever the UUP comes into contact with the bottom rail of its uptrend channel that would be a good signal that the PM complex may need to consolidate its recent impulse move which I believe is just getting started. Something we can monitor.

This weekly chart shows the previous two falling wedges which occurred during the last decline with the first one being the blue five point bearish falling wedge reversal pattern. The other falling wedge ended up being a one year bullish black falling wedge. Note the smaller blue five point bullish rising wedge reversal pattern that formed at the 2018 low. Needless to say the UUP likes to form wedges of all kinds.

A couple of weeks ago we looked at this ratio chart which compares gold to the US dollar. At that time the ratio was backtesting the top rail of the small triangle reversal pattern near the bottom of the uptrend channel but failed to make it all the way down, red circle. Again, if the ratio can rally all the way up to the top rail of the rising channel the PM complex should have the wind at their backs.

This next chart is a combo chart which has the SPX on top and GOLD on the bottom. A lot of investors have a misconception about the stock market and gold. Most gold investors believe the stock markets have to crash in order for gold to rally which happens sometimes as shown by the white shaded areas. On the other hand some of GOLD’s biggest rallies have come in tandem with the SPX green shaded areas. Since their 2016 lows the SPX has rallied much stronger than GOLD but gold has also been trending higher. No one knows 100% for sure what’s going to happen in the future but it wouldn’t hurt my feelings to see both the SPX and GOLD rally together like they have done many times before.

Below is a simple weekly ratio chart which compares GOLD to the SPX using the 200 week sma. As you can see there are not many buy and sell signals, but if you get one it pays to follow it for the longer term. Earlier this year the ratio got close to the 200 week sma but failed to breakout above it. Also keep in mind ratio charts can be a bit deceiving at times. For instance both gold and the SPX can rally at the same time, but if the SPX rallies more strongly than gold the ratio will fall. What this ratio is currently telling us is that the SPX has been outperforming gold since the first of the year.

Below is a 50 year chart for the GOLD to SPX ratio using the 200 day sma for long term buy and sell signals. Again, you can see how well it works with very few buy and sell signals and only a few whipsaws over a 50 year period. There are two ways you can look at how the ratio interacts with the 200 week sma. First, when the ratio crosses above or below the 200 week sma you get a buy or sell signal. Also when the 200 week sma moves from a rising position to a falling position you can get a buy or sell signal. If you get whipsawed always go with what the price action and the 200 week sma are showing you what to do. You may get whipsawed for awhile but the price action and the 200 week sma will always show you the long term trend which is your friend. The next time the ratio crosses back above the 200 week sma we know it will be time for GOLD to outperform SPX for most likely a fairly long period of time.

This next chart is a 10 year weekly ratio charts which compares the HUI to the SPX. In 2011 when the ratio completed the 9th reversal point in its multi year reversal pattern the SPX shed no sympathy on the HUI. This chart shows you a good example of what a bear market looks like with one consolidation pattern forming just below the previous one. Back in late 2015 it looked like the ratio was finally going to reverse direction when the red rectangle reversal pattern formed, but it wasn’t to be. Does the current 2016 falling wedge look familiar to you? That is the same one we are following on the PM stock indexes. This ratio may be seeing the light at the end of the tunnel and it may be time for the HUI to outperform the SPX for awhile. Remember they both can go up but if this ratio is rising the HUI is outperforming the SPX.

This last chart for tonight is another ratio chart going back 45 year which compares gold to silver. When the ratio is rising gold is outperforming silver. When the ratio trades above 80 that is a generally a good time for the precious metals complex as shown by the red dashed vertical lines. What we want to see is for the ratio to drop below 80 which would be another bit of confirmation the rally in the PM complex is alive and well.

We are seeing some signs that the PM complex is trying to bottom in this general area. To really get this beaten down sector back on its feet again I would like to see more confirmation take place on some of these ratio and moving average charts above. The bottom appears to be in place for the PM complex but it’s always nice to see confirming signals from different perspectives to add the frosting to the cake.

All the best

By Rambus Chartology

https://rambus1.com

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

© 2019 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

© 2005-2019 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