Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Trend Forecast 2024 - 15th June 24
Gold Price Consolidating at High - 15th June 24
NVIDIA Stock Market: Price Prediction for the Future - 15th June 24
When Will the Boom/ Bust Rollercoaster End? - 15th June 24
Stock Market Trouble Lies Ahead. Are You Ready For It? - 15th June 24
Stock Market Investor Sentiment - 8th June 24
S&P 494 Stocks Then & Now - 8th June 24
As Stocks Bears Begin To Hibernate, It's Now Time To Worry About A Bear Market - 8th June 24
Gold, Silver and Crypto | How Charts Look Before US Dollar Meltdown - 8th June 24
Gold & Silver Get Slammed on Positive Economic Reports - 8th June 24
Gold Summer Doldrums - 8th June 24
S&P USD Correction - 7th June 24
Israel's Smoke and Mirrors Fake War on Gaza - 7th June 24
US Banking Crisis 2024 That No One Is Paying Attention To - 7th June 24
The Fed Leads and the Market Follows? It's a Big Fat MYTH - 7th June 24
How Much Gold Is There In the World? - 7th June 24
Is There a Financial Crisis Bubbling Under the Surface? - 7th June 24
Bitcoin Trend Forecast, Crypto's Exit Strategy - 31st May 24
Zimbabwe Officials Already Looking to Inflate New Gold-Backed Currency - 31st May 24
India Silver Imports Have Already Topped 2023 Total - 31st May 24
Gold Has Done Its Job – Isn’t That Enough? - 31st May 24
Gold Stocks Catching Up - 31st May 24
Time to take the RED Pill - 28th May 24
US Economy Slowing Slipping into Recession, But Not There Yet - 28th May 24
Gold vs. Silver – Very Important Medium-term Signal - 28th May 24
Is Gold Price Heading to $2,275 - 2,280? - 28th May 24
Stocks Bull Market Smoking Gun - 25th May 24
Congress Moves against Totalitarian Central Bank Digital Currency Schemes - 25th May 24
Government Tinkering With Prices Is Like Hiding All of the Street Signs - 25th May 24
Gold Mid Tier Mining Stocks Fundamentals - 25th May 24
Why US Interest Rates are a Nothing Burger - 24th May 24
Big Banks Are Pressuring The Fed To Losen Protection For Depositors - 24th May 24
Another Bank Failure: How to Tell if Your Bank is At Risk - 24th May 24
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

A Most Important Gold Ratio Chart…

Commodities / Gold and Silver 2016 Nov 06, 2016 - 06:29 AM GMT

By: Rambus_Chartology

Commodities

Tonight is a good night to post one of the ratio combo charts we’ve been following for a very long time , which compares the TLT:GLD ratio to the GLD. Below the ratio chart is a ten year weekly bar chart for GLD. There are many ways to analyze a ratio combo chart like this which can help one look for the intermediate to longer term trends.


When the ratio chart on top, the TLT:GLD is rising, that means the 20 year Treasury bond is out performing GLD and when the ratio is declining GLD is stronger than the TLT. On the left side of the chart you can see how the ratio chart on top built out a H&S top at the same time GLD built out a H&S consolidation pattern during the 2008 crash. Once both H&S patterns were complete GLD rallied for almost three years while the ratio chart declined. Note how the ratio chart on top and GLD on the bottom, both gave each other a nice kiss when gold topped out at 1920 in September of 2011 and the ratio bottomed, red arrows.

That point marked the exact starting point for GLD’s nearly four and a half year bear market. That bear market decline lasted until December of 2015 and ended when the ratio chart topped out at the previous 2008 high. Some of you may remember that when the ratio chart was trading at the 2015 high it was building out the blue rising wedge. If you recall I was looking for a possible breakout above the top rail which would have driven GLD down to the 700 area. What I knew was that whatever the direction of the breakout move, out of the rising wedge, a good move would occur.

You have to look real close but the ratio left a nice big breakout gap the week the rising wedge broke to the downside telling us the bear market was over for the PM complex at the same time GLD was breaking out above the top rail of its inverse looking bullish falling wedge. As you can see these two have been in consolidation mode since the spring of this year. This week the price action on the ratio chart touched the possible neckline and bottom rail of a potential bear flag. Just like we had to wait for the ratio chart on top to tells us which way the rising wedge was going to breakout we are in the exact same situation right now. The odds favor the ratio chart breaking down but confirmation the next impulse move is underway will be when the ratio chart closes below the neckline and the uptrend line.

Keep in mind that is a two year H&S top on the ratio chart so a big move should occur if and when the neckline gives way. From a Chartology perspective the TLG:GLD ratio chart is still in an uptrend while GLD is still technically in a downtrend. You can see how the next impulse leg down in the ratio and up in GLD will complete the massive reversal patterns. Things are setting up. Now all we have to do is wait for their respective breakouts to happen.

One last note on this ratio combo chart which is showing GLD has formed a positive divergence to the ratio chart by forming a higher low vs the 2008 crash low while the ratio topped out at the 2008 top. It’s pure speculation at this point but if the ratio chart declined down to its 2011 low, GLD’s high with the positive divergence GLD has right now, how much higher would GLD be? Anyway, knowing the big trend is most important. Trading against the major trend can be done but just look at how much easier it would have been to trade in the direction of the big trend vs against it. The setup is there now all we have to do is wait for confirmation.

This ratio chart analysis can confuse even the most experienced members . I recommend you study these two charts and then re read the narrative above.

Below is a daily chart for the TLT:GLD ratio which shows the H&S top up close and personal. Today the price action touched the neckline for the seventh time which is telling us the two year neckline it’s hot. This chart will give us the first clue when the next impulse move up is really underway for GLD. Have a great weekend. All the best…Rambus

PS

Sir Plunger at the Chartology Forum wanted to add the following to this discussion

Just had to comment on his TLT:Gold relationship post. Here is Rambus chart

Well there is a slight similarity of this pattern to something else near and dear to our heart. The great big H&S in oil before the big crash. Here it is:

and the resolution:


All the best

Gary (for Rambus Chartology)

http://rambus1.com

FREE TRIAL - http://rambus1.com/?page_id=10

© 2016 Copyright Rambus- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Rambus Chartology Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in