This weekend I was doing a little reading about the megaphone pattern. By no means was I able to absorb everything I read, but I did learn enough to do a little investigating on my own. And another day I will return to what the learned experts have figured out and try to make a little more of their understandings my own.
One of the intriguing things I read was that there is often a Fibonacci relationship between the various high and low points as the megaphone pattern progresses. Being painfully familiar with the Market Vectors Gold Miner ETF (GDX) and its huge megaphone pattern I got to thinking I would start there and poke around a bit - see if there really were any Fibonacci relationships at play. Honestly, I was sure there would be so I threw out the idea of investigating the Fibonacci price measurements with something a little more exotic and unlikely - the Fibonacci time ratios.
After we take a quick look at what I found out, I have a 5 minute chart of the continuous Gold Futures chart (/GC) that I'd like to show you. As I watched it trade last Friday I became aware that it was forming a megaphone pattern. And naturally, if there are Fibonacci time ratios in a huge daily chart of GDX, I just had to find out if there were any Fibonacci time ratios in a little tiny 5 minute megaphone on gold's chart.
Finally, and thanks to a reader in London (hi Viktor!) I thought a weekly chart of the SPDR Gold Trust ETF (GLD) with a little True Strength Index (TSI) indicator musings for the upcoming week would round out this post quite nicely. I'll show you from a TSI perspective what I hope happens this week.
So, our first chart is the infamous GDX megaphone.
Click on any chart to ENLARGE
As you can see, I found a Fibonacci relationship for for nearly every significant high and low - including the breakdown location (10) and the May bottom (11).
Now if someone else would just make a few hundred of these for me to study, I could tell you all about this specimen. Any volunteers?
Next up is the gold futures (/GC) megaphone that began taking shape last Thursday and Friday, as seen on this 5 minute chart.