Pm Complex Bounces , Bulls Hold Charge – But the Bull Trap Risk Looms Large

This week, we are finally getting some movement in the PM complex. It’s still too early to know for sure if the bounce this week is the real deal or another short-covering rally, but on the minute charts, there is some bullish price action taking place, which shows potential of a bottom.

Just one chart on the CDNX tonight, which shows the double H&S bottom with the triple breakout of the top trend line of the expanding falling wedge, which we know is one of the most bullish chart patterns in Chartology, NL 2, and the top blue trend line of the bullish expanding rising wedge right shoulder. That breakout gave us important confirmation things were going to change in a big way for the CDNX.

To negate the blue diamond reversal pattern, the first thing we’ll need to see is for the price action to trade above the apex of the diamond and then a new higher high and higher low.

Next is a 2-hour chart for the HUI, which shows the small black June falling wedge, which didn’t show its hand until today, when it closed above the top trend line, completing the falling wedge as a reversal pattern to the upside.

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Today, the price action stalled out on the backtest to the small blue bear flag, which is now part of the falling wedge. Note the small false breakout below the bottom trend line, which is called a bear trap once the price action broke out.

As you know, I look for small reversal patterns at the reversal points in a trading range, which most of the time shows up. If we see a little weakness over the next day or two, the HUI could be forming a small inverse H&S with the neckline symmetry line coming in around the 619 area for the right shoulder low. Here again, we need to start seeing the price action start making new higher highs and higher lows to really get the trend reversed to the upside.

This next chart we’ve been following very closely shows the February falling wedge, which began with the 5-point triangle reversal pattern. The small black falling wedge we just looked at on the chart above shows up on the bottom of the falling wedge as a reversal pattern, which would be the 6th reversal point if the HUI can take out the top trend line, which will complete the pattern as a bullish falling wedge. Note the small false breakout below the bottom rail of the falling wedge, which can lead to a large move to the upside as long as the price action can stay above the bottom trend line.

Next is the daily combo chart showing the falling wedge with 5 completed reversal points, which is still technically a reversal pattern to the downside. Keep in mind a reversal pattern has an odd number of reversal points: 3, 5, 7, or more, and a consolidation pattern will have an even number of reversal points: 4, 6, 8, or more. A rally back up to the top trend line will then complete the 6th reversal point, putting the falling wedge back into the consolidation pattern to the upside category. I intentionally made the bottom trend line thin to make it a little easier to see the false breakout below the bottom trend line.

The weekly combo chart takes out all the noise the daily chart above shows. The reason the potential black falling wedge is so important is that it’s bigger than any of the smaller blue consolidation patterns formed during the last leg up in the bull market rally into the all-time high. That being the case, then it will most likely be a halfway pattern from the 2024 low to the all-time high, added to the 6th reversal point low in the black falling wedge, for a price objective.

The blue arrows measure the impulse move from the late 2024 low to the first reversal point in the bullish rising wedge. That distance is added to the last reversal point in the blue rising wedge to get your minimum price objective up to 2282, where the first reversal point in the next consolidation pattern began to form, which was the blue triangle. Now the blue triangle becomes the next halfway pattern as measured by the black arrows, which gave us our bull market high where the current correction began.

It’s easy to forget just how bullish the PM complex was at the January 29th high, and no one wanted the party to end, but I had to be the bad guy and exited all the trades in the PM Stock Trades Portfolio on February 2nd. As you can see, we did see a second try at the all-time highs, but it failed and the double top formed, which was the second clue that a correction was going to take place. How deep and how long was unknowable at that time, but going to cash and locking in the profits worked out well. With 100% cash in the PM Stock Trades Portfolio, I put 5% in DSVSF today, seeing enough positive price action to dip my big toe back into the water again.

The double top high ended the parabolic rise and was another reason we got a deeper correction when the price action closed below the parabolic arc. After the initial decline off the double top high, we got the first countertrend rally, creating the first and second reversal points in the blue triangle consolidation pattern. Once the blue triangle pattern was complete, that was another big piece of the puzzle that lower prices were coming when the bottom trend line gave way. The blue arrows on the HUI show the blue triangle price objective, which hasn’t been met yet and is a slight negative.

Now for the potential bearish side of the equation: the H&S top with two necklines. The blue triangle on the chart above formed the right shoulder for H&S #1 with that 13-day long drawn-out backtest. After the backtest was complete, the PM complex moved lower until we got that 5-day short-covering rally, which backtested the neckline for the second time, which has led to the current decline and NL#2. Note how the neckline symmetry line showed us where to look for the right shoulder high.

For the last month or so, the price action has been interacting with NL#2, with the breaking out and backtesting process a little sloppy. GLD and SLV have been forming either a small consolidation pattern to the downside if the price action can’t take out the top trend line, or a double bottom reversal pattern if the price action takes out the top trend line. Note several of the indexes gapped back above their neckline today, telling us the neckline is properly placed and is important. Now we have to see if the bulls are back in charge if they can maintain the close above the neckline.

Below is a nice clean version of the H&S top from the line chart perspective. Today, several of the indexes closed above their neckline, while others are strongly testing their neckline, which still leaves us at the critical inflection point.

This weekly chart for the GDXJ shows the multi-year H&S base, which launched the bull market. The first consolidation pattern after the breakout above the neckline was the bullish rising wedge, which we know is a very bullish pattern when it forms in an uptrend. You can think of it as a running correction.

This weekly chart shows how the potential bullish falling wedge fits into the big picture as the next consolidation pattern if we get the breakout above the top trend line. There are many individual precious metals stocks which are showing the same falling wedge.

Until we get confirmation one way or the other, I have to show you the potential H&S top and how it fits into the big picture. The blue arrows on the top chart show the measured move price objective into the 2026 all-time high. During the bull market rally, the price action never closed below the 30-week ema until neckline #1 was broken and has since started to roll over.

Next is the daily combo chart for gold with the log scale bar chart on top and the linear scale line chart on the bottom for a slightly different perspective. On the left side of the chart, you can see the measured move price objective into the all-time high as shown by the black arrows.

From the all-time high, gold has been declining, forming the blue bearish rising wedge with its price objective as shown by the blue arrows, where the next consolidation pattern began to form the blue triangle. The price objective for the blue triangle is down to 3595 as shown by the red arrows. How that small sideways trading range resolves will tell us if gold moves down to the 3595 area to complete the correction or if it turns out to be a double bottom, then the low for the correction will most likely be in The linear scale line chart will give you a more conservative measured move price objective.

This monthly chart for gold is one we’ve been following very closely for many years, looking for the 20-month ema to hold long-term support. We lost the 10-month ema, so now the 20-month ema becomes critically important. The only time during the 2000 to 2011 bull market the price action ever closed below the 20-month ema was during the 2008 crash, and that only lasted one month.

The red circles show the percentage declines going back to the 2008 crash low, which ended up being 35%. Excluding the bear market from 2011 to the 2016 low, the H&S base which launched the next bull market was just over 25%. The multi-year 2020 flat top expanding triangle was just over 21%. The current correction is right at 30%, which is in line with the other corrections since 2008.

During that strong impulse move out of the 2020 bullish flat top expanding triangle, I kept mentioning that during a strong impulse we could see two and possibly three small blue consolidatioin patterns before the impulse leg runs out of gas. We ended up with three small blue consolidation patterns. I also mentioned when we put in the 2026 all-time high that we could see a larger consolidation pattern start to form, which could take many months to a year or longer to complete, but it would be possible to trade the reversal points in the large consolidation pattern. If this current low can hold support, we may have the first complete reversal point in play with a rally up to the top of the all-time highs, creating the second reversal point, with one more decline to find the all-important 4th reversal point low. Are we witnessing the first reversal point low right now?

Silver is at some important price levels right now. This first chart shows the horizontal trading range, which held support until late June when the price action closed below the brown shaded support and resistance zone. Since then, silver hasn’t been able to trade back above it and is now backtesting it again around the 61 area.

This daily chart shows the February falling flag, which has completed four reversal points when the bottom trend line was recently touched, putting it into the consolidation pattern to the downside category. Here again, it’s up to the bulls to hold support and rally silver back up to the top trend line to complete the 5th reversal point, which puts the falling wedge into the reversal pattern category. What’s encouraging from the bullish perspective is the second low that has just formed next to the previous low, telling us the bottom trend line is properly placed and could be forming a double bottom.

If the February falling wedge completes as a halfway consolidation pattern, as shown by the blue arrows to the downside, the measured move price objective would be down to the 47 area, which isn’t all that far down.

This next chart is silver’s possible bullish falling wedge, which we looked at earlier on the daily and weekly charts for the PM complex at the beginning of this Wednesday Report. Again, you can see the two lows side by side finding support on the bottom trend line, which is positive as long as the price action stays above the bottom trend line. Note how much larger the 2026 falling wedge is vs. the small consolidation pattern that formed the last leg up in the bull market rally.

Let’s look at a few indicator charts to see if they can give us any guidance. This first one is the BPGDM on the bottom with the GDX on top. Normally, when the BPGDM gets to the top of the range around 100 or the bottom around zero, I like to look for a divergence between the two. At the 2026 high, you can see there was a divergence when the GDX made a slightly higher high, but the BPGDM made a slightly lower high as shown by the red arrows. You can see other times when this happened, but it’s not foolproof, see previous divergence. That divergence didn’t work out because of the bullish rising wedge on the GDX, which again is like a running correction allowing the indicators to reset without the price action giving up any ground.

Currently, we still have a divergence taking place at the bottom of the BPGDM. Note how the BPGDM is making higher lows, but the GDX is making lower highs. So as the GDX has been moving lower, fewer and fewer PM stocks are on a point and figure sell signal, which should be bullish. The actual buy signal will come when the 5-day sma crosses above the 8-day sma and the BPGDM is trading above the two moving averages. Now we just need to see the shorter red 5-day sma cross up above the 8-day sma.

This next indicator chart is the GDXADP PM stocks advance decline index. I like to look for divergences on this indicator chart as well. The red and green dashed vertical lines show when the PM stocks are oversold or overbought. Divergences also show up on this combo chart with the GDX on top. Note the divergence at the 2026 high, which actually began back in October of 2025. As the GDX was moving higher, the GDXADP made a lower low, setting up the current decline. Currently, there isn’t much of a divergence, but the GDXADP is in oversold territory and could be ripe for a bounce. As you can see, the indicator has been below 25 multiple times, as shown by the green dashed vertical lines.

This next chart is a ratio chart, which compares the HUI to the SPX. During its bull market run, the HUI was kicking the SPX’s butt until the 2026 high. Since then, the HUI has been underperforming the SPX but could be forming a bullish falling wedge if this 6th reversal point low can hold support on the horizontal dashed S&R line at .80. If this ratio can breakout above the top trend line, this could be bullish for the PM stocks in general.

This next ratio chart compares the HUI to the US dollar, which brings us back to the critical inflection point we’ve been following for the last month or so. Which pattern is going to win out, the bullish falling wedge or the H&S top?

Now to the really important chart for the next directional move for the PM complex, the US dollar. The US dollar on top has recently broken out from the one-year expanding triangle and has been forming the blue flag above the top trend line, which is normally a bullish setup. I added the black circle on the GDX chart below to show the critical inflection point that’s been ongoing for over a month now. If the bull flag on the US dollar completes, then the inverse correlation between the US dollar and the PM complex is suggesting the PM complex will decline. I wish I could tell the markets what to do, but all I can do is follow the price action and let the markets tell me what to do.

This next chart for the US dollar is a longer-term look, which shows the double H&S top that formed in 2025, which led to that parabolic rally in the PM complex, see the parabolic daily combo chart above, as the US dollar declined, the PM complex rallied. Now we have what appears to be a large base with the blue flag forming above the top trend line. That neckline has 5 touches on it, which makes it very important. Once the price action breaks above resistance, it then should become support when backtested from above, which we are currently seeing.

This longer-term daily chart for the US dollar put in its 2022 high after the near-vertical rally. That 2022 high is actually the starting point for the bull market in the PM complex. If the one-year H&S base completes, it has a measured move price objective up to just over 105, or close to the top trend line of the falling wedge. What will the PM complex do if the US dollar rallies up to the 105 area?

It’s running late and I need to get this finished. This last chart for tonight is the weekly combo chart for some of the US stock markets, which begins at the late 2021–2022 high, forming a rising wedge in many cases. We’ve gotten the breakout above the top trend line where the price action has been either forming a consolidation pattern, which will lead to new all-time highs, or a reversal pattern. If we end up seeing a reversal pattern and the price action trades back below the top trend line, then there will be a false breakout bull trap, which can be a very bearish setup. Until that happens, the bulls are in charge.

We are finally getting some price movement in the PM complex this week. Now we need to see what it means. As always, we’ll know in the fullness of time. All the best…Rambus

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