by Rambus
Gold Seek
Below is a daily chart for the HUI which shows one of the original patterns that formed the, what turned out to be a Diamond reversal pattern to the upside. There are at least several more reversal patterns that formed at this most important low. As you can see the Diamond had seven reversal point making it a reversal pattern to the upside. The breakout was accompanied by a gap and then a backtest to the top rail. Everything looked good to go at that point then after just four days of rallying the HUI quickly reversed direction and traded below the apex of the blue triangle which is not what I wanted to see as that usually is a bearish setup in this case. After trading just four days below the apex the price action reversed hard again to the upside negating the end around the apex move. That was a shakeout before the breakout or bear trap. Again as we’ve discussed in the past when you get a false breakout in one direction you’ll generally see a big move in the opposite direction. That false breakout of the blue Diamond was the bears last hope to push the HUI lower but they quickly ran out of gas and the bulls then took control which initiating the short covering rally.