The Dam Breaks

Hoover_Dam copy

An important part of the TEMPOS system is analyzing the fractal energy in price charts (see here). The easiest way to do this without a custom Hurst Cycle algorithm is to use the Bollinger Band Width with a moderate period setting, such as 12. When the BB Width contracts, price energy is building, and when it contracts to multiyear or multidecade lows, the move is going to be explosive.

Gold and silver have consolidated for almost 2 years now. While a consolidation can break either way, as a trader you have to be ready to ignore your outlook and go along with the move:

April 14th Gold Fractal

When a dam breaks and water is unleashed it goes in one direction until it finally runs out of energy. Expect this time to be no different in precious metals. There is a lot of water pouring through the dam from above. Plan accordingly. There is a strong whiff of deflation in the air right now across all commodities and long-term bonds.

Good trading all.

Steve Chapman, TRI

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