CRB Commodities Weekly Chart C&H Megaphone Deflation Targets

The green lines show the textbook cup and handle pattern that played out in 2009 and 2010 into early 2011.  The C&H has a beakout line at 280 and targeted 370 which played out perfectly.  The teal boxes show the deflationary conditions in early 2009 when QE1 was announced after the 2008 waterfall crash. The teal circle inside the middle teal box shows when Chairman Bernanke announced QE2. This was perfect timing to cause the breakout from the C&H base line and lock in the target to 370 which occurred by early 2011.

Negative divergence and the rising blue wedge smacked price down in early 2011 and for the last year price is languishing sideways with a downward bias.  CRB is now at the top rail of the red megaphone pattern.  A move to satisfy the megaphone projects much lower prices, in the 220-280 area, which represents a country mired in deflation.  Bernanke will announce QE3 when the CRB falls to test the lower rail of the megaphone pattern and ventures into the teal box shown in the right margin. When QE3 is announced, CRB will catapult higher like 2009 and late 2010, but the upside money pumping rallies are running out of oomph each time quantitiative easing occurs.  The LTRO 1 and 2 pumps occurred at the late 2011 low and that had limited upside.

Projection is failure at 300 signaling that the economy is falling into disinflation.  Then failure under the 280 level signaling a drop deeper into deflation when QE3 occurs and an immediate recovery will occur. This information is for educational and entertainmen tpurposes only.  Do not invest based on anything you read or view here. Consult your finanical advisor before making any investment decision.