Tuesday, May 19, 2015
Let's test that "rule of threes" I keep going on about
Here's the $HUI chart as of this morning:
I've circled three support tests of the upward channel.
I've got this weird "rule of threes" thing in my head that's really only founded by instinct and past experience, but it says "if the chart does something successfully twice, and then tries to do it a third time, it usually fails."
It makes some kind of sense - thing have to break down eventually, and easily recognizable chart patters have to break often or else even the dumbest of us could regularly beat the market. And the market is makes sure that people can't beat it.
So we'll have to see what happens to the gold miners over the next couple days.
Personally, I'm ignoring this morning's drop in the gold price, because:
The only reason gold dropped was because the US dollar went up, as you can see by those last two candles. And as far as the US dollar is concerned:
All it's done today is bounce off a small support cluster (from January) at $24.50 and pop back to the Bollinger mean.
You and I saw that sort of action all the time in the gold miner collapse of the past two years, and in that case it was never a buy signal, only a correction from oversold.
Nevertheless, the US market is full of cokehead panty-piddlers, and so we'll have to pay attention to whether the gold miners break down anyway. Hey, maybe gold ex-US is correcting like the USD, in which case we're just seeing a local top and failure at the SMA(50).
Thankfully, everyone else probably thinks the same thing.