XME: Bullish Bottoming Triangle Indicates Upside Breakout
Are metals prices ready to surge even more. XME-suggests yes.
The SPDR S&P-Metals and Mining ETF-offers broad exposure to industrial-and precious metals and mining, with a strong emphasis at the lower end of the capitalization spectrum. It holds 25 components in an equal weighted market cap.
I have observed the following in the chart of-XME:
A Bottom Triangle/Wedge has formed (bright red on chart). This consists of a group of patterns which have the same general shape as Ascending Triangles. This formation in-XME is an (upside) reversal and not simply a continuation pattern. The above pattern has two converging trend-lines. The pattern displays two highs touching the upper trend-line and two lows touching the lower trend-line.
As a technical analyst I pay close attention to how long the pattern takes to develop to its apex. The general rule is that prices should break out and clearly penetrate the upper trend-line somewhere between three-quarters and two-thirds of the horizontal width of the formation. The break out, in other words, should occur well before the pattern reaches the apex of the Triangle/Wedge. The closer the breakout occurs to the apex the less reliable the formation. As you can see in-XME, the breakout has happened at approximately $24.25.
There is also a way to calculate the upside potential in terms of time and price. This formation took about 100 days to form. My upside projection is to $35.00-$37.00 in the next 100 days.
Five days ago I wrote about a similar symmetrical pattern in-Hecla Mining. I forecast a 20% up move, and this did indeed happen.
Let's review Don's TRADE-MAP approach:
TRADE = 1. T : Time and space (Fractals); 2. R : Repeating Cycles; 3. A : Advancing Trend; 4. D : Declining Trend; 5. E : Energy in Phase Forces.
.....MAP = 6. M : Momentum and Velocity; 7. A : Analysis of Structure; 8. P : Price Performance.
When I mention "Don's Top Ten Technicals", I use the elements of the "TRADE-MAP" approach:
1. The Ichimoku Cloud is rising as well as the 89 day moving average . 2. Prices have risen above the cloud. 3. Prices are trading above the thick red Ichimoku Cloud Conversion line.
4. The thick red conversion line is also rising. 5. The thick black line is the Ki jun-Sen baseline of the Ichimoku Cloud , which is rising and above the cloud. 6. The indicator on the top of the page is RSI / Stochastic , and this is strong. 7. The top middle indicator is vortex and it is strong (green over red). 8. The Top (bar-type) indicator measures the "phase energy" of the stock , and this is STRONG. 9. The green fractal arrows are up (not shown). 10. Look to the far right on the chart, around $24. You will note a yellowish line on top (lips), with black dots below (teeth), and a blue line (jaw) below the black dots. Now, all three are rising, correct? This is where I ask you to use your imagination and envision these three items as the "separated jaws of a feeding alligator". This is a positive indication because the alligator is FEEDING in the uptrend. IN ADDITION - THIS IS THE POINT OF THE TRIANGLE (AND WEDGE) UPSIDE BREAKOUT.
I would like to close with two quotes from Buddy Hackett:
1. “As a child my family's menu consisted of two choices: take it or leave it.”
2. “I've had a few arguments with people, but I never carry a grudge. You know why? While you're carrying a grudge, they're out dancing.”
I hope this has been entertaining and informative. I hope all of your trades go well. Don.
The SPDR S&P-Metals and Mining ETF-offers broad exposure to industrial-and precious metals and mining, with a strong emphasis at the lower end of the capitalization spectrum. It holds 25 components in an equal weighted market cap.
I have observed the following in the chart of-XME:
A Bottom Triangle/Wedge has formed (bright red on chart). This consists of a group of patterns which have the same general shape as Ascending Triangles. This formation in-XME is an (upside) reversal and not simply a continuation pattern. The above pattern has two converging trend-lines. The pattern displays two highs touching the upper trend-line and two lows touching the lower trend-line.
As a technical analyst I pay close attention to how long the pattern takes to develop to its apex. The general rule is that prices should break out and clearly penetrate the upper trend-line somewhere between three-quarters and two-thirds of the horizontal width of the formation. The break out, in other words, should occur well before the pattern reaches the apex of the Triangle/Wedge. The closer the breakout occurs to the apex the less reliable the formation. As you can see in-XME, the breakout has happened at approximately $24.25.
There is also a way to calculate the upside potential in terms of time and price. This formation took about 100 days to form. My upside projection is to $35.00-$37.00 in the next 100 days.
Five days ago I wrote about a similar symmetrical pattern in-Hecla Mining. I forecast a 20% up move, and this did indeed happen.
Let's review Don's TRADE-MAP approach:
TRADE = 1. T : Time and space (Fractals); 2. R : Repeating Cycles; 3. A : Advancing Trend; 4. D : Declining Trend; 5. E : Energy in Phase Forces.
.....MAP = 6. M : Momentum and Velocity; 7. A : Analysis of Structure; 8. P : Price Performance.
When I mention "Don's Top Ten Technicals", I use the elements of the "TRADE-MAP" approach:
1. The Ichimoku Cloud is rising as well as the 89 day moving average . 2. Prices have risen above the cloud. 3. Prices are trading above the thick red Ichimoku Cloud Conversion line.
4. The thick red conversion line is also rising. 5. The thick black line is the Ki jun-Sen baseline of the Ichimoku Cloud , which is rising and above the cloud. 6. The indicator on the top of the page is RSI / Stochastic , and this is strong. 7. The top middle indicator is vortex and it is strong (green over red). 8. The Top (bar-type) indicator measures the "phase energy" of the stock , and this is STRONG. 9. The green fractal arrows are up (not shown). 10. Look to the far right on the chart, around $24. You will note a yellowish line on top (lips), with black dots below (teeth), and a blue line (jaw) below the black dots. Now, all three are rising, correct? This is where I ask you to use your imagination and envision these three items as the "separated jaws of a feeding alligator". This is a positive indication because the alligator is FEEDING in the uptrend. IN ADDITION - THIS IS THE POINT OF THE TRIANGLE (AND WEDGE) UPSIDE BREAKOUT.
I would like to close with two quotes from Buddy Hackett:
1. “As a child my family's menu consisted of two choices: take it or leave it.”
2. “I've had a few arguments with people, but I never carry a grudge. You know why? While you're carrying a grudge, they're out dancing.”
I hope this has been entertaining and informative. I hope all of your trades go well. Don.