Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
IBM - Investing in AI Machine Intelligence Stocks - 25th May 19
Seasonal Dysfunction: Why Generations of Gold and Silver Investors Are Having Such Difficulty - 25th May 19
Employment - The Good and the Bad of Job Automation - 25th May 19
Gold Mining Mid-Tier Stocks Fundamentals - 25th May 19
Buy This Pick-and-Shovel 5G Stock Before It Takes Off - 25th May 19
China Hang Seng Stocks Index Collapses and Commodities - 24th May 19
Costco Corp. (COST): Finding Opportunity in Five Minutes or Less - 24th May 19
How Free Bets Have Impacted the Online Casino Industry - 24th May 19
This Ultimate Formula Will Help You Avoid Dividend Cutting Stocks - 24th May 19
Benefits of a Lottery Online Account - 24th May 19
Technical Analyst: Gold Price Weakness Should Be Short Term - 24th May 19
Silver Price Looking Weaker than Gold - 24th May 19
Nigel Farage's Brexit Party EU Elections Seats Results Forecast - 24th May 19
Powerful Signal from Gold GDX - 24th May 19
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Gold Bullish Inverse Head and Shoulders Pattern?

Commodities / Gold & Silver 2009 Jul 18, 2009 - 02:02 PM GMT

By: Merv_Burak

Commodities

Best Financial Markets Analysis ArticleThe trend started to look good at the beginning of the week but petered out by week-end.  Now, what’s next?  Well, despite what I might have mentioned last week we just might be setting up a reverse head and shoulder pattern.  Read about it in the short term section.


GOLD - LONG TERM

From a long term perspective nothing much has changed in the past week.  The price of gold remains above its positive sloping moving average line and the momentum indicator remains in its positive zone.  Although the indicator had been below its negatively sloping trigger line for the past month or so it is once more above the trigger and the trigger has now turned back to the up side.  Although the daily volume is still low the volume indicator has been showing slightly better strength than either the price or momentum indicator.  The long term rating remains BULLISH.

INTERMEDIATE TERM

The price of gold has been moving in a basic wide lateral path over the past several months and therefore has caused us to reverse our trend direction a few times as the price crosses above and below its moving average line.  This past week the price has once more crossed the moving average line, this time to the up side.  The moving average line started the week heading lower but finished the week heading upward.  The momentum indicator has done a similar reversal.  It is now once more in the positive zone and above its trigger line, which has turned upward.  The volume indicator had dropped below its trigger line for a few weeks but is once more above the trigger and the trigger has turned positive.  All signs suggest that the intermediate term rating is back to the BULLISH side.

SHORT TERM

As mentioned in the opening remark, we just might be heading towards a bullish reverse head and shoulder pattern.  Don’t get too excited, however.  If we do get one confirmed it is only a very short term one and the projection for the move would only be to the previous high in early June.  My one emphasis last week that for a reverse head and shoulder pattern to be valid one must have had a bear trend leading into the left shoulder.  As a short term pattern, we have such a short bear market move here, during the month of June.  To make the pattern more probable I like to see a divergence in the momentum indicator at the head location.  That we do not have here.  However, a potential pattern is there just the same.

Another potential pattern can be recognized by long term readers to these commentaries.  We are progressing along into a FAN PRINCIPLE set of FAN trend lines (short period variety, of course).  We now have the first two FAN trend lines (the first being the bear market move into the left shoulder of the H&S pattern).  I have also drawn where the third FAN trend line might be (dash line).  It could coincide with the formation of the right H&S shoulder and the breaking of the (red) neckline.  Although there are no clear criteria on price projections for a FAN pattern I do like to assume that a FAN reversal would take us back to the apex point of the FAN.  That is where the H&S would also project.    

          

So, where are we really, from the short term perspective?  We have the price this past week moving above its short term moving average line with the line turning up towards the move.  We have a momentum indicator that has moved into its positive zone, above its positive trigger line.  The only cautionary indicator is the daily volume activity.  That still remains low with speculators seemingly still unsure of the gold direction.  However, the indicators have reversed last week’s rating and the short term is back to a BULLISH rating.

As for the immediate direction of least resistance, that seems to be turning towards the down side.  The aggressive Stochastic Oscillator seems to have topped out inside its overbought zone and is in the process of turning downward.  It has not yet done so and is still above its trigger line so the reversal may be another day or two away.

SILVER

Although silver had acted better than gold over the intermediate and long term, and had beat gold in the performance game over the past week it still has some catching up to do versus recent gold action.  While gold seems to have been going through a bottoming process over the past few weeks silver just headed straight down and now straight up after a sharp turn.  The sharp turn has reversed the rating for silver on the short term but still has not done anything on the intermediate term.  More upside would be needed to turn the intermediate term rating around.

          

As for a similar H&S pattern as with gold, well there is none.  If one were pushing his imagination to the hilt one just might think that there was a left shoulder at the end of the week of the 22 June but that would really be pushing it.

For now we have the price of silver trading above its short term moving average line and the line slope just turned upward on Friday.  The short term momentum indicator, although heading upward fast, is still slightly in the negative zone but above its positive trigger line.  Despite the slight negative momentum, the sharp direction is to the up side and the short term rating is now fully BULLISH.

As for the intermediate term the price still has a way to go to breach that negatively sloping moving average line.  The momentum is similarly in the negative zone but above its positive trigger line.  The intermediate term rating remains BEARISH for now.

As for the long term, silver had been toying with a long term reversal but is back on track again.  It is above its long term moving average line and the line is pointing upwards.  The momentum indicator is moving higher and is just a hair below its neutral line but above its positive trigger line.  The long term is rated as BULLISH this week.

PRECIOUS METAL STOCKS

WOW!  that was a good week for gold and silver stocks.  The average price of a stock in the universe of 160 stocks rose 8.8% during the week.  The other Merv’s Indices were a fraction of a % higher or lower, except the two gambling Indices which were on the plus side but only about half of what the other stocks were.  The major North American Indices were higher mostly in the 10% to 11% area due to the highly weighted Freeport-McMoRan gaining 19% during the week.  The Toronto based S&P/TSX Global Gold Index was up only half as much as the U.S. based Indices due to a 4.2% rise in the value of the Canadian $ versus the U.S. $. The move was quite general with 132 (83%) off the 160 stocks closing on the up side and only 23 (13%) closing on the down side.  The best mover gained 104.8% on the week while the worst mover lost only 8.0%.  This 8% loss was the only loss that was greater than 5%, all others were very minor.  Despite this happy week only about 37% of the 160 stocks are classified as BULLISH (POS) on the short term and 33% BULLISH on the intermediate term.  Lots of room for more upside moves.

Despite the one week move, it was only a one week move.  We need more of these to set the trend back to the up side BUT we will take the upside moves when we can get them. 

Precious Metals Indices Table

Well, that will be it for this week.

By Merv Burak, CMT
Hudson Aero/Systems Inc.
Technical Information Group
for Merv's Precious Metals Central

For DAILY Uranium stock commentary and WEEKLY Uranium market update check out my new Technically Uranium with Merv blog at http://techuranium.blogspot.com .

During the day Merv practices his engineering profession as a Consulting Aerospace Engineer. Once the sun goes down and night descends upon the earth Merv dons his other hat as a Chartered Market Technician ( CMT ) and tries to decipher what's going on in the securities markets. As an underground surveyor in the gold mines of Canada 's Northwest Territories in his youth, Merv has a soft spot for the gold industry and has developed several Gold Indices reflecting different aspects of the industry. As a basically lazy individual Merv's driving focus is to KEEP IT SIMPLE .

To find out more about Merv's various Gold Indices and component stocks, please visit http://preciousmetalscentral.com . There you will find samples of the Indices and their component stocks plus other publications of interest to gold investors.

Before you invest, Always check your market timing with a Qualified Professional Market Technician

Merv Burak 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