by David G. Hawkins
Intermediate Term Timeframe – Weekly Bars Chart
The first chart here is the weekly bars chart. We see that the TopFinder, right most purple curve, has just ended, right where it was projected to end, between the two dashed vertical lines. This means that the accelerated uptrend that began in June is over. Indeed, price has already been in a consolidation at this top for several weeks.
Look now at the somewhat longer term uptrend that began one year ago. It has had two complete cycles of higher highs and higher lows, and is now at a third higher high. Notice that the second up cycle, from Nov. ‘11 through April ‘12, was also followed by a TopFinder, left most purple curve, which likewise ended in a consolidation before price pulled back to the next higher low. It would be too easy to just assume that now price is going to sink down to another higher low, just as it did in the previous cycle. And indeed that could well happen. But I must remind everyone that the ending of a TopFinder does NOT predict what will happen next, other than to expect at least a short consolidation. We will only know what happens next once price breaks out of the consolidation, either up or down.
Short Term – Daily Bars Chart
The second chart here is the daily bars chart. In my last post here, I noted that price had just come down to and supported at S3. I said, “The uptrend since last July will end when price definitively breaks below the latest S curve”. Since then, price sprang up for over a week, formed a double top with the previous high, then sank down and did definitively break below S3. So, the uptrend that started last July (which is a different uptrend from the one discussed on the weekly bars chart) has ended.
Look at the structure of this chart since early September. Not only has price broken below S3, but price is also below the previous low of Sept. 25th, so this is a lower low, which indicates we’re in a new downtrend. Furthermore, as of this present time, price is breaking support (S3) while holding below resistance (the new R1), and that is the Midas definition of a downtrend. This downtrend will continue until price breaks above the lastest resistance curve.