Below is a chart I’ve been posting for the last 3 weeks or so showing the, old possible H&S top pattern, and the all important big brown Neckline and our reaction to it as support and resistance. Notice the big brown neckline and how many times we held support through the construction of the big H&S top pattern, at least 6 or 7 times. Notice when the neckline finally gave way, we broke through very easily as there were no more buyers to give support. That neckline then reversed its role from support to resistance and now anyone who bought at the neckline is now underwater and the mind set is , if I can just break even I will sell and get out. Look where the 1st reaction from the underside of the neckline stopped, first red circle. This is TA at its finest. After the first reaction from the underside the sellers took over again and drove the price down to it’s low for the move where new buyers stepped in to pick up the bargains. This setup the next rally phase that took us back up to the underside of the neckline, 2nd red circle, where we ran into the same resistance again, and built the right shoulder for our little inverse H&S. The rally off of the right shoulder low took us up through the neckline where we failed to get all the way through and stopped right at the highest part of the resistance band before the next reaction took place to drive the price back down to the little neckline and just a bit farther before we managed to find enough support and begin the most recent rally phase. This rally, by virtue of eliminating most of the sellers on our big brown neckline, easily took out that neckline and proceeded to the next resistance area, the top red downtrend rail of our bullish falling wedge. Look at the little interaction we had with that red top rail. First the little reaction when we first touched it from the underside, then the break up and through, and then one more little test from the top side before we rallied and exhausted ourselves at the 460 area where the sellers took control for awhile. Notice where the little H&S bottom told us to look for resistance, 455.
So, this now brings us up to the present. We have started a normal reaction from last weeks rally that could take us down to support, just under 420 where the top of the old brown resistance band and the top red rail of the bullish falling wedge intersect. The most important thing we need to confirm is that we start to make higher highs and higher lows, which we have done from the the May, 390 low.
Wait and see what we do in this current reaction down at the old brown neckline 420ish, if we get there, before you go puking up any stocks silverboom. So far the HUI has shown considerable strength fighting through all of the overhead resistance and now needs alittle time to build up some strength for the next assault at the old high. Like grin stated yesterday, maybe the little juniors will show some strength in here as the bigger caps have a small correction.
All the best to you silverboom…Rambus
May 6th look
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May 22nd look
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