Lots going on with commodities and they will tell us when Chairman Bernanke announces QE3. If you are a budding technician, study this chart closely. The blue circles show how the lows in the CRB correspond to QE1 and QE2 announcements. This is because the CRB falling reflects deflation and triggers Bernanke to act. The pink box shows where we are headed that will result in QE3. Look at the impact of QE2 compared to QE1, it shows how Bernanke's hot easy money floated into emerging markets, commodities, copper, gold, etc..., causing the new asset bubbles that are now popping.
Note the positive divergence in late 2008 into 2009 that bounced the CRB, along with QE1. The blue lines show a textbook long term C&H, the bottom at 200, breakout at 280-ish, which targets 360+. Also, note the bull flag in red, first leg 200 to 295-ish, then consolidation flag, then second leg starts at 250, thus 250+95=345+ target. This year the pink lines show an H&S, head at 370-ish (note the top is identified by a hanging man candle), neck line at 325-ish which failed last week, thus 280-ish target (pink box). The H&S target is the C&H breakout area and flag consoidation area which ties it all up in a pretty bow.
Note the current fight is at the 200 week MA at 307, this should fail. Keystone's work shows we are entering Disinflation now. When the CRB hits the pink box in the days or weeks ahead we will be in Deflation, and then Chairman Bernanke will step in with QE3.
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