I believe today marks the day we’ve been waiting for for nearly 4 1/2 years in the PM complex. Below is just a quick update on what took place this morning.
Below is the weekly combo chart we’ve been following that shows the bottom rail of the 2022 triangle which shows a breakout to the downside three weeks ago. I’ve been suggesting to watch the backtest very closely to see if the bottom trendline would hold resistance and to look for a lower low below the breakout low for more confirmation.
As you can see we didn’t get a lower low, but instead gapped back above the bottom trendline which now shows a false breakout or bear trap. This is a big deal. Normally when you see a false breakout you can get a strong move in the opposite direction which in this case is up. There is also a small double-bottom reversal pattern just below the bottom rail of the 2022 triangle.
Note the breakout gap on GLD above its bullish rising wedge this morning. See the possible H&S top on SLV which was one scenario I was looking at for a possible bearish outcome. Today’s price action is now trading above the right shoulder high which again is another failed sign for the bears. A move above the right shoulder high of a well-defined H&S top is another bear trap which strongly suggests a big move is coming to the upside.
All in all the gap above the bottom rail of the 2022 triangles, showing a false breakout and bear trap, was one important thing I was looking for to strongly suggest the bottom is in and I don’t say this lightly.
Another key sign the decline is over is the breakout gap above the top rail of the 2020 bullish expanding flat top triangle on GLD this morning. The top trendline can be drawn in several different ways, but today’s gap now shows the true angle of the top trendline which is perfectly horizontal. A possible backtest to the top rail can be expected for more confirmation, but not necessary.
It’s been a tough 4 1/2 years in the PM complex, but I really think the bottom is in and the next important impulse move is beginning. If this is truly the bottom the price action will waste little time in moving higher and surprise everyone on its strength.
This is still a low-risk environment for those of you that have your favorite PM stocks you may want to start accumulating. This is just the beginning of what I think will be a very powerful rally and will now take most by surprise.
We’ve been following this 60-minute combo chart on the US stock markets since last summer which shows some of the false breakouts = bear traps that occurred on some of the US stock market indexes at the October 27th bottom and what has taken place since.
I believe the correction is over as of last week in the PM complex and I don’t say that lightly. All the best - Rambus 