Loading ...Will the downtrend channel of gold hold or break decisively to the downside?
Good question: Will the downtrend channel of gold hold or break to the downside?
Who knows? $1080 could have been forecasted as the channel floor for mid-2015 as far back as the turn of this year. The low on this chart of 22 July was $1080.00 but that has since been exceeded to the downside, although gold is still hanging on at $1095 as I post.
The downtrend channel in gold since late 2013 has narrowed from around $254 in 2013 to $170 now. It’s only just wedge-shaped. I wonder at what point of narrowing a channel becomes a wedge?
The channel ceiling is at about $1250 and the floor is at $1080, so stepping down that channel depth ($170) would give a new range from $910 to $1080. If it takes a little time to get to the $910 target, then it could go lower because the channel is downsloping.
$1080-(1250-1080)=$910.
So, $890 is well in the sights if the current trend channel breaks down and if a new lower trading range persists parallel to this one, sloping at about $50 every 6 months, Rick Ackerman’s $817 target could be reached in under a year.
http://www.kereport.com/2015/07/20/doctor-commenting-drop-price-gold/
Also, in late 2014-early 2015 there was a lot of trading in gold around the old $1180 support level, with the recent fall taking price well below that. Wouldn’t it be a pig if there is a dead cat bounce rally to $1180 imminently and a failure of bullish sentiment there, to enable us to get a real good downleg going afterwards?
I would also like to ask Fullgoldcrown, Plunger and others who have done so much interesting work on bear market charts how they view the current gold, silver and miners’ charts in comparison to the post-1980 bear market. Are there any posts that study the post-1980 precious metal charts?
The best 1980-1999 gold charts that I could find outside this site were from Peter Brandt. Has anyone done a study on gold 1980-1999 in a similar way to your chart studies of Dow 1929-32, Nikkei 1989-92, etc?
I have edited this post to include these links to answer questions mentioned in the comments. This is where Peter Brandt’s charts of gold from the mid-1970s to 2014 are located:
http://peterlbrandt.com/history-of-gold-in-charts-updated-version/
I think I may have read an older version of this page previously – this newer page was updated 7 August 2015 and there is downloadable pdf there. i liked the charts because they covered the whole period of around 1973 to 2014.
Also, he has written another short article:
He seems to be bearish overall and looking for an extended gold bear market, perhaps similar to the 1980-1999 experience.
Brandt has been very bullish on Asian stock markets this year:
http://peterlbrandt.com/an-update-on-asian-equities-upward-explosion-ahead/
http://peterlbrandt.com/major-eruption-ready-occur-global-stock-markets/
Since he wrote those Asia articles these markets broke out big time then crashed, all in a few months!
I am intrigued by how incredibly bearish everyone is on China as their Shanghai SSEC market index bounced off long term support in the low 3000s, previously resistance for several years. I think the jury is out on that market in reality. Also the Nikkei broke above previous highs at 18,000 and hit long term resistance at 20,000. I think the jury is out on that one, too.
Hi Dave…Yes that channel is compelling and suggesting at least a bounce..good work
let me see if I can find Plunger !
Weekly spinning top candle noted on DUST –can portend a change in trend.
A few questions, Can you tell us more about Peter Brandt’s conclusions and where we can access his work. (short of subscribing to his letter) Also, yes I would like to go back and study the 1980-84 bear. The problem is data feed availability. No HUI back then of course and stock charts doesn’t have the BGMI data which would be very useful so I am forces to use and chart off of a spread sheet. In a few weeks I might be able to look into it.
Your perspective and methodology is new to me and I am not sure as to its stand alone applicability. I would like ot see more examples of past cases in other markets to get a better feel for it. This concept of a narrowing channel I suppose leading to the end may be considered a bearish/bullish falling wedge/triangle ? I suppose that’s the hypothesis? As for myself this issue has already been answered by combining the fact which Rambus has pointed out that the massive 2 year mid bear consolidation pattern (triangle) stands alone, having begun and ended by a massive gap. This does not show up on the gold charts but does on all the eqity indexes. The gaps serve as bookends to the begining and end of it. This lines up with the psychology of the market that follow.
Clearly, the charts reflect the psychology of the liquidation phase (phase III) that we undoubtably are in. I think Rambus’ measured moves off his charts are the most valid and useful methodologies as to the eventual outcome we will face.
Here is a chart chowing the gaps I am referring to:
http://stockcharts.com/h-sc/ui?s=$HUI&p=W&yr=2&mn=6&dy=0&id=p95566098764&a=418631497&listNum=99#
Plunger, here is a link for BGMI, choose long term at top left
http://www.sharelynx.com/chartstemp/free/fchart-BGMI.php
Hi guys, thanks for the comments. I was initially trying to compare the gold chart of the last 1.5-2 years with the Japanese Yen chart for the same period and the charts of some of the miners.
On a google image search I found a Rambus chart of the Japanese Yen showing the breakdown last September (2014) following a consolidation in a bearish falling wedge kind of pattern that seemed to contain a couple of nested triangle patterns within it.
I was wondering if gold was going to crash out late in 2014 to a low around $1030 in similar fashion tot eh Yen crash. I note that Barrick and other miners also broke down at this time.
I now see gold in a fairly similar though not identical pattern to the Yen from September 2014 with the price slippping out of the bottom of its falling wedge as it went under about $1090.
Obviously it would be interesting to see if this were a false breakdown (a kind of oversold flush) or a real breakdown. I note that in the Japanese Yen chart there was a move back into the wedge before the actual crash shown clearly here (the green circle):
http://rambus1.com/wp-content/uploads/2015/03/xjy-day1.png
So in my gold chart above I tried to find equivalent patterns to the Yen chart. There are some differences between the gold chart and the Yen /Barrick / GDX charts of course. To me the gold chart wasn’t as bearish (yet) and I wondered if that would mean any final drawdown in gold price would be less devastating than in these other charts.
Another feature of the gold chart was the twin lows at around $1180 in June and Dec 2013. Those lows of course would form the base of a triangle pattern that first started to break down in 2014 and that presumably would have had a measured move of about $254 (1434-1180), the height of the original triangle at the start) to a target around 1180-(1434-1180) = $926.
However the pattern of highs in gold has been very consistent for 2 years, stepping down about $50 each time (1434, 1393, 1347, 1308) but the initial triangle pattern has morphed into a falling wedge with the new lows at $1130 (Nov 2014) and $1070 (Jul 2015).
There seem to be many ways of calculating lower targets in gold at various figures and I am just searching around for methods. I very much enjoyed (in a perverse sort of way given how the gold market stands) reading the articles about Phase III moves in bear markets and such moves are evident in the gold sector stocks but not so clear in the precious metals themselves perhaps.
I suppose my main question is: how far up the food chain of quality does the bear devour?
I joined the site to share some ideas but more to try to learn about well-founded technical analysis. I have been fascinated by the gold market action since around 2000/2001.
Has anyone done median line or reaction line analysis on the gold sector? I have tried in my own naive way and it told me that $1030 last December was possible. However it did not happen at that point.