GDXJ Inverse H&S

GDXJ Inverse H&S (Red Neckline)

GDXJ Inverse H&S (Red Neckline)

GDXJ has an inverse H&S bottom on its long-term charts (red neckline).  It’s also formed a megaphone off the bottom (blue) and just put in the retrace to VWAP that makes the megaphone legal for an upwards breakout.

That means GDXJ could head straight up from here for a breakout from the inverse H&S, with a target of roughly 100 (green scenario).

The purple scenario represents a triangle right shoulder on GDXJ’s inverse H&S, with follow-through on a larger inverse H&S set-up.

The orange scenario represents a breakdown through the blue megaphone VWAP for a new low near zero.  The odds of this are extremely small.

The pink scenario represents a false breakout through the red inverse H&S neckline to put a megaphone right shoulder on the formation.  If you see GDXJ reenter the inverse H&S after a small breakout, get ready to buy the dip just below 25.

The longer GDXJ spends down here forming a right shoulder, the more likely it is to break out quickly through 100 when it finally heads up.

Gold is Approaching its 1250 Critical Decision Point

Gold is Approaching its Critical Decision Point at the Purple Megaphone VWAP

Gold is Approaching its Critical Decision Point at the Purple Megaphone VWAP

Gold is approaching its purple megaphone VWAP (volume-weighted average price) and critical decision point at 1250.

Gold had a mandatory retrace requirement to 1250 before it could legally break out downwards from the purple megaphone and through the orange megaphone VWAP at roughly 1140 for a trip to the orange megaphone bottom in the 700s.  So gold could reverse at 1250 for that plunge.

Gold is Approaching 1250 within the Red Rising Megaphone on the 60-Minute Chart

Gold is Approaching 1250 within the Red Rising Megaphone on the 60-Minute Chart

Gold is approaching 1250 within the red rising megaphone on the 60-minute chart. This rising megaphone would typically complete with a head and shoulders top inside the formation that breaks out at the same time as the formation for a plunge to its bottom at 1200.

From 1200, gold could go blasting off past the July 2016 high for a breakout from a big inverse head and shoulders on the weekly charts.  That’s unlikely with a chart like this.

More likely, gold will either enter into the green megaphone-in-megaphone scenario on the top chart to complete a triangle (red on top chart) that could break out in either direction, or gold will complete the navy blue megaphone top on the 60-minute chart and break out downwards into the 700s.

The green triangle scenario is the strong favorite, but remember that Neely has a big correction set-up on his SPX charts for February or March that could mean an atypical move for gold too.

Gold Update

Gold Appears to Be Forming an Interior Megaphone Across VWAP of its Blue Megaphone, Raising the Odds a Triangle is Forming

Gold Appears to Be Forming an Interior Megaphone Across VWAP of its Blue Megaphone

Gold appears to be forming an interior megaphone across VWAP of its blue megaphone.

While this could be a bottoming formation before an upwards breaking from the blue megaphone, or a quick consolidation before a plunge to the blue megaphone bottom, it’s more likely that gold is forming a triangle along the bottom of its red rising megaphone.

That triangle could break out in either direction. A downwards breakout would take gold to the blue megaphone bottom and its long-term retrace target of the bottom of the red rising megaphone.

An upwards breakout would mean the red rising megaphone is extending.

The green scenario is a strong favorite. A meltdown to the blue megaphone bottom would be a strong set-up to buy gold for long-term.

Gold Price Channel

Gold has Confirmed the Red Price Channel on its 60-Minute Chart & is in Its Critical Decision Wave

Gold has Confirmed the Red Price Channel on its 60-Minute Chart & is in Its Critical Decision Wave

Gold has confirmed the red price channel on its 60-minute chart and is in the channel’s critical decision wave. That’s where the channel usually either starts a top or breaks out into a melt-up.

The Melt-Up Scenario Could Retest the July High or Even Break Gold Out of the Big Blue Megaphone While a Top Here Could Lead to Further Consolidation or a Trip to the Big Blue Megaphone Bottom

The Melt-Up Scenario Could Retest the July High or Even Break Gold Out of the Big Blue Megaphone While a Top Here Could Lead to Further Consolidation or a Trip to the Big Blue Megaphone Bottom

If gold starts a top here it could be the top before a crash to the bottom of the big blue megaphone gold has been forming since late 2014. That would be a crash to buy.

A breakout into a melt-up could target a retest of the July 2016 high or even an upwards breakout from the big blue megaphone.

A top here could also lead to a prolonged period of megaphoning across 1200 to morph the big blue megaphone into a triangle. The triangle could break out in either direction but would be a favorite to break out downwards to take gold down into the 700s to put in the final bottom for its correction off the 2011 high.

Gold Inverse Head and Shoulders

Gold has Formed an Inverse H&S Bottom for a Retrace to at Least 1250

Gold has Formed an Inverse H&S Bottom for a Retrace to at Least 1250

Gold has formed an inverse head and shoulders bottom (red neckline) for a mandatory retrace to a megaphone VWAP at 1250.

It looks like gold may complete a megaphone right shoulder (blue) on the inverse H&S before getting going on its move. If not, it’s broken out.

Gold Big Megaphone Bottom on the Daily/Weekly Charts

Gold Big Megaphone Bottom on the Daily/Weekly Charts

Gold is working on a big megaphone bottom (blue on daily chart) for its move down out of the 2011 high.  It could reverse at 1250 (green scenario) for a trip to the blue megaphone bottom.

Or it could blast right through 1250 (purple scenario) for a trip to the purple megaphone top before a retrace to the 1250 VWAP again to set up a breakout from the big inverse H&S on the chart.

Or it could start a new megaphone across 1250 that would eventually spin off new megaphones across 1250 (orange scenario) to form a triangle right shoulder (red) on the big inverse H&S on the chart.

Gold is Deciding Whether to Extend its Move Up (Purple Scenario) or Retrace to the Bottom of its Pink Rising Megaphone

Gold is Deciding Whether to Extend its Move Up (Purple Scenario) or Retrace to the Bottom of its Pink Rising Megaphone

Essentially gold is deciding whether to complete its long-term rising megaphone (pink) with a breakout to the formation bottom or extend its move up with an inverse H&S here before a move to a new high.

GLD is Nibbling at the Bottom of its Long-Term Rising Megaphone

GLD is at its Critical Decision Point at the Silver Megaphone VWAP & Long-Term Rising Megaphone Bottom

GLD is at its Critical Decision Point at the Silver Megaphone VWAP & Long-Term Rising Megaphone Bottom

GLD is nibbling at the bottom of its long-term rising megaphone (red) and VWAP of the megaphone (silver) it’s been forming since September 2014.

It’s a favorite to either break out directly to the silver megaphone bottom (green scenario) or form a triangle here before it does.

If instead it breaks out upwards from the potential inverse head and shoulders on the chart (blue neckline), either straight from here or from a triangle right shoulder, the minimum target is in the 160 area, but it could melt up to another new all-time high.

Gold Price Channels

Gold Price Channels

Gold has Maxed Out the Waves Down in its Red and Silver Price Channels – Must Start a Bottom or Continuation Pattern Here

Gold has maxed out the waves down in a price channel and roll-up price channel (red and silver in chart above). That means it has just started a bottoming or continuation pattern.

I’ve drawn a megaphone (green) and inverse head and shoulders bottom (purple) on the chart, but gold could also form a triangle here or a falling megaphone bottom.  The green megaphone could also put in fewer waves and stay smaller and tighter than drawn.

Gold is Back at its Blue Megaphone VWAP but Needs to Retest its Orange Megaphone VWAP Too and is a Favorite to Make a New Low

I Drew This Long-Term Chart a Few Weeks Ago but the Scenarios are Still the Same

An inverse head and shoulders here that breaks out upwards could lead to a breakout from the big inverse H&S/blue megaphone on the chart above (purple scenario).

If instead gold forms a bottoming megaphone here that breaks out upwards, it could be part of a larger megaphone (green scenario) that will form a series of megaphones inside megaphones across 1200, drawing a continuation triangle on the chart before a plunge to the blue megaphone bottom.

Gold could also form a megaphone here that breaks out downwards into a falling megaphone that takes the price more quickly to the blue megaphone bottom.

GLD at Long-Term Rising Megaphone Bottom

GLD is Back at the Bottom of its Long-Term Rising Megaphone

GLD is Back at the Bottom of its Long-Term Rising Megaphone

GLD is back at the bottom of its long-term rising megaphone (red) and VWAP of the megaphone (navy blue) it’s been forming here.

GLD could bounce here to form a triangle before breaking out of the red rising megaphone (green scenario) or it could break out to the navy megaphone bottom to complete the retrace to the red rising megaphone bottom.