Tonight, I observed the development in real time, so I would like to show you before and after photos. The reason I want to show you these long-term chart patterns is to show you how important it is to get the big picture right. If the big picture is correct, you can use shorter time frames to fine-tune your entry and exit points.
And if the big picture is correct, it also means that when the next significant upswing in the bull market begins, it won't be short-lived. This is where many investors who don't understand the importance of large chart patterns try to trade back and forth and end up getting left behind. There is no worse feeling than being left behind with a very strong impulsive move.
We are currently seeing this situation in the US stock market. For example, since the October 2023 low last fall, there has been no correction of more than 3%, and investors are waiting for a larger correction. Perhaps we'll see a 10% correction before the current strong impulsive move ends, but if the stock market is in a true melt-up stage, those waiting for a low-risk entry point will never hope. You won't be able to get what you had and will miss out. One of the biggest bull runs in history.
The most difficult part of finding a large trading range that is still building is waiting for the pattern to complete. Often when it comes to large trading ranges, from 6 months to a year or more he may need to wait to be patient until a breakout occurs. Most investors don't have the patience to wait that long and get frustrated and start overtrading.
The great thing about finding a large trading range well before the trading range is complete is that you can be fully prepared for what's about to happen. Some of the biggest gains came during the first few months of strong impulsive moves as price action exploded, leaving investors wondering if this was the bottom, especially after a four-and-a-half year correction. may be obtained. It's easy to see the bottom in hindsight, but it can be difficult in real time, but if you wait patiently for the setup, you'll be calm, collected, and collected.
This first chart for tonight is a long-term quarterly line chart that we have been tracking since long before the black expanding triangle broke out. Look at where gold is traded and what I suggested in the last sentence.
This is what I wrote about Gold's 2020 Black Expanding Triangle just a few months ago, on February 20th of this year.
February 20, 2024:
With less than six weeks left in Q1 2024 trading, gold is testing the upper rail of the expanding black triangle. A bullish sign would be a new high despite the lack of backtesting at the end of March.
Today April 7, 2024:
As you can see, gold actually showed no backtesting at the end of the quarter at the end of March, indicating a very strong breakout move. The reason I didn't expect there to be a backtest at the end of March is because it doesn't show up in terms of a quarterly line graph.
Also, looking at this quarterly line graph, the monthly closing prices rarely go down. The biggest thing we saw during the 2000-2011 bull market was the crash low in 2008, but it was barely noticeable. The impulsive move from the 2016 H&S consolidation pattern was on its way down from the 2011 bull market high, the blue arrow, and showed nice inverse symmetry to the upside in the same area.
Now let's take a look at the 2020 gold trading range and what happened at the low or fourth reversal point of the flat-top expanding triangle. We discussed its size relative to some previous integration patterns.
November 27, 2022:
Let's go further back in time and see how the 2020 flat-top expansion triangle compares to other trading ranges from before. In 2008, gold formed a fairly large H&S consolidation pattern that blew out the upside in 2011. After that, gold formed a blue square and finally had 6 reversal points before the price movement broke downward. Again, the blue square began to form below his 2011 high. Therefore, an even number of reversal points was required for a consolidation pattern to occur.
The bear market that followed the 2011 highs finally ended with the formation of a nearly six-year H&S comfort pattern. I call this a comfort pattern because it is still forming during the secular bull market of 2000. Like the black arrow, the floor price target was met, that particular impulsive move ended, and we saw some more follow-through to the upside before the 2020 flat-top expansion triangle began to form.
Gold still has a lot of work to do, including closing the month above the 10-month and 20-month ema for starters. Using the bottom rail of the 2020 flattop expanding triangle as a line in the sand, we can see that the risk-reward ratio is significantly in favor of the bulls, especially if we are witnessing the last reversal point.
Same post: Second long-term chart of gold showing target price indicated by blue arrow
If we look a little further ahead, we can see how the 2020 Flattop Expanded Triangle fits into a slightly bigger picture as a possible middling pattern. The 2016 triangle formed above the 2016 low, so it only needed four reversal points to become a valid consolidation pattern, and it worked out great. That strong impulsive move that started from the 4th reversal point formed several small consolidation patterns before the price movement finally topped out in August 2020, where the current flat-top extension A triangle began to form. If this is his fourth reversal point, the blue flat-top expanding triangle will have a price target up to the 2882 area as indicated by the blue arrow.
Today April 7, 2024:
Below is the current weekly chart for gold, showing what happens after the fourth reversal point of the 2020 extended flat-top expansion triangle on the chart above. The black arrow still points to the lowest price target around the 2880 area.
Now let's look at H&S's massive consolidation pattern in 2016, which reversed the 2011 bear market and its aftermath.
This was written by me on June 8, 2019, about 5 years ago.
It's hard to believe that the massive H&S consolidation pattern we've been tracking for several years started developing all the way back in 2013, during the initial crash from the 2011 high. This weekly line chart shows this week's price action ending at the 1350 neckline. Notice how much the neckline touches from below and recedes each. Now, the question remains, how can the bears protect the 2013 neckline? If they are exhausted, there is a good chance that the price movement will break through the neckline and surge higher as a large H&S base completes, this time being bullish for the long term. Big patterns lead to big movements.
Long term view of the same post.
This monthly chart shows how H&S's consolidation pattern fits into the bigger picture.
The same secular bull market uptrend channel that has existed since 2000. Notice the ping-pong movement I noted between the neckline and lower trendline of the 2000 secular bull market uptrend channel.
The reason I call this H&S a consolidation pattern is because of how it fits into the major secular bull market uptrend channel.
Today April 7, 2024:
We see a small ping-pong movement between the right shoulder of the H&S neckline and the 2000 secular bull market uptrend channel and subsequent bottom rail.
Return to the present. Below is a weekly candlestick chart of the PM complex that we have been tracking for half of its existence. Since the October 2023 low, price action has built either a consolidation pattern or a double-dip pattern for H&S, both of which are reversal patterns. Notice some breakout gaps that occurred last Monday during the breakout of the neckline or double bottom trend line. Both are forming just below the top rail of the 2020 bullish expanding descending wedge, strongly suggesting that the top rail will break. As you can see, ) and ) have already broken out, and ) and ) are strongly testing their upper trend line.
The next long-term monthly chart of the PM complex traces back to the very symmetrical H&S top that formed at the end of the 2000 bull market. The 2016 black dashed vertical line separates a bear market from a new bull market, but I know it doesn't feel that way because of the sideways movement since the 2016 lows.
This combo chart mostly focuses on the 2016 uptrend channel, with the May 2022 triangle forming off the lower trendline. In some cases, the May 2022 Triangle top trend line could extend to the previous high, making that trend line even more significant and potentially the next overhead resistance area.
At the very least, we expect to reach the top of the 2016 uptrend channel over the next year or so, which could coincide with a possible end to the US stock market crash phase. If that happens, everything, including the PM complex, will be exposed to intense sell-offs and bear markets.
Finally, we look at the upper rail of the bear market downtrend line connecting the 2011 highs and some of the most notable 2020 highs. Notice where SLV, GLD, and GDXJ were trading at the end of January of this year.
This is what I wrote on January 26, 2024.
Our final chart for tonight is a simple quarterly line chart. This chart shows a top trendline taken from the top in 2011 and a downward-sloping top trendline created in 2020, with only one upward-sloping trendline. With the exception of gold, it still shows a downward trend line since 2011. If the PM complex can break above the 2011-2020 trend line, the bear market will officially be crossed in my view. As you can see, SLV has been tested many times and so far has not been able to be eliminated. Hopefully it's only a matter of time.
Bottom line: I'm still bullish on PM Complex, but keep an open mind if things don't start to improve soon. Silver appears to be the key to the next big direction for the PM complex. There are several different roadmaps in front of us that will help guide us and give us a significant edge in staying on the right side of the PM complex.
Today April 7, 2024:
Now compare what SLV, GLD, and GDXJ have done since January of this year. SLV completed a massive H&S consolidation pattern breaking out of the top and neckline of the 2011 downtrend line with his single breakout. In fact, GLD's expanding triangle backtest holds support and GDXJ is currently trying to break above the 2011 downtrend line.
We are beginning to see the downtrend line of the 2011 bear market, which has dominated for 13 years, finally starting to break. Metals are in the lead for now, but PM stocks should start catching up in a way we haven't seen in a long time. All bubble periods are still reeling, so stay tuned. Have a great weekend! We wish you all the best… Rambus (NASDAQ:)
