The last Diamond consolidation we looked at was in the TSX-V/TSX ratio back on June 17th.
“That said, the TSX-V/TSX ratio is in a Diamond consolidation pattern above support on the daily chart. A Diamond is thought to be a pause, but neither a continuation (in this case, upward) or a reversal pattern. It’s just a consolidation from which the thing is going to break one way or the other. By my eye it’s going to make that break very shortly and then maybe we’ll have a look at the coming near-term macro situation insofar as this ratio is an early indicator on the reflation/inflation trades or failure thereof.”
It made the break, it was bullish and the rest is history.
As for HUI, it too is forming a Diamond above key support. If the break is upward, it should blow away our hold 375 resistance target and set on a journey toward 500, which is the next major resistance area. If the break is downward then we’ll get a test of the SMA 50 and possibly the SMA 200, both of which are trending up and healthy.
My guess, you ask? My guess is that it breaks upward. The HUI/Gold ratio is still in a healthy uptrend and as reviewed in NFTRH 616, the CoT situation never did get dangerous for the metals. RSI has gone positive and MACD has stayed positive. It’s a hunch. There’s been a decent bit of correction angst in the sector lately. In a bull market, corrections tend to be faster and more dynamic. They climb walls of worry.
Regardless, HUI may be able to jiggle around within the Diamond for another trading day or two, but as with TSX-V/TSX linked above, a breakout one way or the other should be coming very soon.