Charts Showing 9 Potential Bottom Patterns In Precious Metals
David Tablish | Mar 22, 2017 07:13AM ET
There is a combo chart for the PM complex I’ve been following, on the short-term, 10-month daily view, which shows a potential H&S bottom forming for the Precious Metals complex. I put a neckline symmetry line on the charts to get a feel for where the low for the right shoulder may form.
In some cases the low is fairly parallel to the neckline, for instance for the SPDR Gold Shares Fund (NYSE:GLD), iShares Silver ETF (NYSE:SLV) and the ARCA Gold BUGS Index (HUI), with the VanEck Vectors Junior Gold Miners ETF (NYSE:GDXJ) and Global X Silver Miners (NYSE:SIL) being the most unparalleled. The S&P/TSX Venture Composite Index (CDNX) is showing the most weakness, which probably has to do with some of the small cap energy companies listed there.
GLD is trading the closest to the neckline, so it may give an early heads up for the PM stock indexes. Keep in mind these potential H&S bottoms won’t be complete until the necklines are broken to the upside.
This next chart is a long-term weekly look at the HUI which shows its potential big trading range with the first reversal point starting at the August 2016 high. Reversal point #2, which may be underway, should take the HUI up toward the 286 August high which would be the area in which to look for the 3rd reversal point to the downside.
Note how the top of the trading range formed a H&S top for the first reversal point; now it looks like a H&S bottom for the 2nd reversal point. Interesting, to say the least.
Below is a daily chart for the HUI which shows the potential H&S bottom forming inside the large trading range.
Get The News You Want
The 20-year monthly chart for the HUI provides a good look at all the consolidation patterns that formed during the bull market years. During the bull market the HUI formed one consolidation pattern on top of the next. I have all the reversal points labeled on each consolidation pattern.
Most of the consolidation patterns lasted anywhere from 14 to18 months or so. On that basis, we are likely less than halfway through this present pattern. The red numbers on the left side of the chart show the same height for each consolidation pattern. And as you can see, our current pattern is also the same height.
This is a good area in which to see a H&S bottom build out, just like the H&S top that built out at the first reversal point that's defining the trading range.
Markets are live entities. Each day new patterns can slowly emerge.
Chart patterns are the sum total of the actions of all the traders who participate. Keeping an open mind, we must evaluate and re-evaluate and constantly be on the lookout for clues as to what will happen next.
Stay tuned. It looks like the Precious Metals markets are getting interesting once again.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.