The following chart of the Commodity Index by Morgan Stanley shows how prices move along dominant trendlines. Major price rises and declines are constantly being accomplished at the end of triangular price formations. Explosive thrusts to the up and downside are acting at the same time as a first move within a next triangle. Without having to draw single triangular annotations, one can see clearly that the CRX-Index is all about triangles since the end of 1996.

Welcome to the Thrust

For more than one year copper is being thrusting out of a massive triangular price formation that began at the end of 1996. At $120, copper has made it above a resistance point that was first marked in 1997 and was acting as the first high point of this 8-year long triangle. This price level has now being converted into a strong support zone with the help of the big (green) triangle. Whether copper will be able to close above next resistance at $140 might be decided by another triangle which probably will use $110-$120 as lowest support leg. Since breaking to the upside, copper broke out of its triangular price pattern relative to gold. This indicates, that copper has been rising faster than gold.

About six months later, aluminum managed to break out of its year long triangle and has been thrusting ever since. Analogous to copper, aluminum was being stopped by a similar resistance zone at $85 and is now trying to overcome this with another triangle. Support lies at $77.

As noted before, the U.S. Dollar Index was caught in a triangle, which lasted 9 months. At the end of January 2003, the USD began breaking the upside leg and rose to 87.5 index points before pulling back to the triangles` apex at 85 points in the middle of February. Since the pullback was completed, the USD is now in the process of trying to thrust to the upside. In my humble opinion this thrust will one day being classified as an exemplary fake-breakout. Even though the USD is breaking to the upside out of a year-long triangle, I would not take a dime betting that this thrust is "real," thus making me believe this being a classical "fake".

The 30-year U.S. Treasury Bonds are priced above 110 – a resistance zone that was being trespassed with the help of a massive triangle, which was building up for more than 13 years. The implications of this massive triangle thrusting in a certain direction will have profound and long-term effects for all other markets.

The 30-year Treasury Bonds have been yielding within a narrowing, downside pointing triangle for about 10 years. After having touched the very end of the triangle, the yield from these Bonds is breaking fast to the downside now. It will be interesting to watch whether the (red) support zones will be breached fast or rather slowly. However this will be done, if the last marked support line will be breached to the downside, there will be only one direction for these papers: down south.

The HUI Index has been engulfed in a dominant triangular chart pattern since October 2003. In total there have been 4 amplitudes within the triangle so far. If one bets that gold and consequently the HUI will start moving to the upside soon, then recent prices of the HUI stocks can be classified as "Strong Buy" at the moment. At the bottom of above chart one can see the relative performance of HUI stocks when compared to the ones from the XAU Index. Clearly, the HUI Index has been outperforming the XAU Index consecutively, but taking a closer look at the very manner that the HUI has been racing against the XAU, one might see a triangular pattern. Right now, we are standing at the very end of this formation, at the apex of this (blue) triangle. If gold, the HUI and the XAU will be rising soon, then this (blue) triangle will explode to the upside, indicating that the HUI Index is not only outperforming physical gold, but aslo his (hedged) peers from the XAU camp.

Similar triangular situation for the XAU Index. When the XAU is being compared with gold price movements, one can see at the very bottom of above chart that the XAU is outperforming gold rather weakly.

Light Crude Oil has been moving within a triangle since the end of 1996. The apex is being positioned at the end of 2005. Although this seems to be quite far away until this triangle will be ready to thrust, let me state again, that not every triangle is using pullbacks to touch its apex. Yet this triangle can break out any time above the upper leg, cut across $40, and start moving fast for about one year thinking we are in a thrust. After that oil might be correcting sharply back to $40, exactly to its apex, showing that this pullback is necessary before thrusting "for good." A question that I ask myself is not whether oil might break to the downside or when it will break to the upside, but more interestingly, in case of a thrusting oil and gold price, which will be rising faster? At the bottom of the chart you can find the oil price compared to gold. Astonishingly, they are caught in another triangle to each other. If this (yellow) triangle breaks to the upside, this indicates (among other possibilities) that oil is rising faster than gold. If this triangle breaks to the downside, gold is rising faster than oil (note that I am extremely bullish on both markets).

The Oil Index (XOI) has been moving within a triangle since the end of 1996. However, since the middle of 2002, the XOI was breaking beneath the lower leg and needed about one and a half years to pullback exactly to its apex. This looks like a dramatic fake breakout that made it back to the end of the triangle and is now rising fast to the upside. When comparing the XOI to gold, one can notice that the XOI is quite cheap and ready to rise faster again.