US Equities Fractal - revisitied - again... + EURUSD and Gold update

I keep on harping on about this equities Fractal pattern I spotted a couple of weeks ago. I first alluded to it almost as an aside at the foot of this post here on the 22nd June, admittedly I was a touch sceptical about it, however I deemed to keep half an eye on it. - After a few days it seemed as though it may have some value, and did a more in-depth piece on it here on the 25th June.
Now with the first part of this pattern's predictions, a drop to 1040, a brief consolidation (very brief infact), then a further drop though 1040 and so on achieved, I thought I would revisit this fractal pattern, to see where it forecasts the S+P next.

The fractal pattern is shown below from shortest period a few weeks (Chart #1) at the top, to the multi-month chart (Chart#2) in the middle, to the multi-year chart (Chart #3) bottom.

I have attempted to show how similar the construction of these patterns are. Also note that the top chart is the right-hand side of the middle chart's Head & Shoulders pattern, and the middle chart is the right-hand side of the lower chart's Head & Shoulders pattern.

Given how similar the charts are and how related they are, it is possible they have predictive ability to each higher scale chart. If they do, then one can assume that further lows lay ahead, with a steady continuous drop in the index down to the lows at the start of the second chart. For the S&P this is around 666, (Although I think a case could be made for the support being around 770 as this is where the left shoulder of the neckline occurs), with the likely timing in Q4 for the low. After that, another rally may ensue, which may retrace a large part of this current decline. I base this on the fact that the top and middle fractal retraced twice from the neckline, before breaking on a third attempt. --- This guesstimate of future price action is of course highly speculative, and I consider it more as a rough road map rather than an accurate close-up set of predictions. However, I will continue to pay attentions to the prospective signals up until they stop working .

A couple of other points, the EURUSD has broken well above the 40 day moving average, and appears to have broken the neckline of an 'Inverse Head & Shoulder' pattern. If it can maintain these breaks, then the mid to low 1.2400 area will switch to support, with the 1.30/1.31 as a prospective target.

Gold too has made a dramatic break, I alluded to the risk of this in my post from here a couple of days back. If it can hold this break, this could signal the end of the Gold Bull run for some time, with significant lows ahead. - With regard to Gold and the EURUSD, 1 day's price action does not make or break a trend, however if these break can hold for a few days and in the case of Gold a few weeks, then today's moves could prove to be highly significant.

GOLD at a key juncture possibly.

Of all the Markets which have confused me during my time as a trader, the one which has baffled me the most and has probably floored me more than any other is Gold................ I don't profess to be an expert on Gold, infact a quick look back at the few Gold trades I have done over the years will confirm just that.... However, I do look at Gold and start to wonder exactly how high it can go, given its quite amazing gains over the past decade, particularly in light of the performance of most other asset markets during this time and considering the deflationary winds blowing across the major western economies. I am not however going to try and debate reasons for and against buying or selling Gold, this is covered in depth in a million or so blogs and news services elsewhere, however I am going to post a few charts, which I hope may shed some light on where I think Gold may be heading...

Firstly I will show 2 sets of fractal patterns, one with Bearish possibilities and the other with a potential Bullish outcome:-

The first set of chart show a series of Rising Wedges embedded within each-other, rising wedges are potentially bearish patterns.

The second set of charts show the Gold over the same period, however this time I have identified each pattern as a series of Bullish 'Cup & Handle' patterns.


The third set of charts shows the performance of Crude Oil 2007 and 2008, together with a similar set-up on the weekly Gold chart. I will admit, that if one looks closely at the two charts, there are many differences, however I am trying to capture the essence of the moves, which on both charts show two converging arcs of support and resistance.
My head says the arc converging from the left should win, and turn Gold sharply lower, however there is no reason why this could not break in favour of the sharply rising arc, particularly as this arc has a longer duration. If this were to break to the upside, it could quite possibly project Gold sharply higher. Either way, I think soon we will see a sharp move.

I will confess, at this stage I have no idea which side will win, however I think it worth watching a break of either 1200 and 1300 for the next significant move....

US Equities Fractal.

I am going to revisit something I posted earlier this week. The link is here, the item I refer to is the additional point regarding the S+P500 at the very foot of the article, regarding a repeating pattern I had in the S+P which intimated we may about to head lower. Though I was myself somewhat reticent about whether this had any validity, the S+P has fallen some 40+points since then without any correction.

In terms of Technical Analysis, the chart referred to is a 'Fractal Pattern'. A fractal is a rough or fragmented geometric shape that can be split into parts, each of which is (at least approximately) a reduced-size copy of the whole. I recall looking at a similar analysis in relation to the Bank Index a few years back, prior to the spectacular crash in that index during the 2007/2008 bear market. My original analysis at that time was looking at the Bank Index and a rare '3 Peaks and A Domed House Pattern'. I noticed that this pattern, or some variation of it which overall was similar in formation, existed as one zoomed in closer and closer from the Multi-year chart right down to the intra-day chart. I have tried to emphasise this in the charts below (It will help to click on the charts to see them larger) .

 Below I have redrawn the S&P Index, however I have used the NYSE composite for the larger period, and the S&P Sep future for the shorter periods, since I think this captures the essence of what I am looking at better.
The implication of this Fractal analysis is that we appear to have a Head & Shoulder pattern embedded in the right shoulder of the next higher scale Head & Shoulder pattern, and so forth from intra-day up to multi-year. A highly respected ex-colleague of mine told me once that embedded patterns within other embedded patterns can be very dynamic.

This fractal analysis may work, it may not work, or it could be a misanalysis, however the implications if it does work are stark. --- My reading of this at the moment is as follows; the current move in the S&P should continue on to around 1040ish, possibly with a small bump or two along the way but not too much. After a pause and consolidation around/above 1040ish, then a further drop should begin, which could see a move towards around the 800 level ( I consider the 666 low an overshoot). After further consolidation around 800 there would then possibly be one further move to around 450-500. -- I will add that this is of course highly speculative, it is reliant on whether this analysis is valid, it is reliant on me correctly reading this analysis and reaching the right conclusions (for example this current move could be a Left shoulder forming, etc) , and of course it is reliant on whether it continues to perform in the manner consistent with prior performance.

On that note, I will finish this posting for now... Finally good luck to our boys for Sunday in the World Cup v Germany............

-- COME ON ENGLAND--.