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GDX (Gold Miners ETF): Substantial Upside Potential

Monthly time frame:

  • A large Falling Wedge, which took two years and a half to be completed, should open the door to retracement of the decline from the 2001 top. The initial target is located at the 0.382 retracement (95% upside from Friday's eod print would be a substantial upside potential)
  • An eom print above the 20 mma, which today stands at 18.10 would confirm that a large recovery is underway

GDX Monthly Chart
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  • A multi-year positive divergence of the RSI is suggesting that the rebound could be large and long lasting. In addition the RSI has breached the trend line resistance from the 2010 high and the MACD has a bullish signal cross in force since May 2014

GDX Monthly Momentum Chart
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Weekly time frame:

  • A Morning Doji Star (reversal candlestick pattern) has been followed this week by a potent rally
  • GDX has reclaimed the 50 w ma (First time since June 2014)
  • On Friday price reached the last lower high of the Falling Wedge and closed above the Bollinger Band
  • This rally is short-term extended. Some consolidation activity would be healthy.
  • Resistance: Above Friday's close we have R2 at 18.65 (A gap that can be filled/closed then R3 at 21.25
  • Support: S1 at the 50 wma = 16.27 and S2 at 15.61

GDX Weekly Chart
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  • Weekly oscillators are also poised for higher prices in the weeks ahead.

GDX Weekly Momentum Chart
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Daily time frame:

  • Sensational rally from the January low without a meaningful pullback GDX has rallied 38%
  • Obviously GDX is now extended and overbought
  • If next week there is a pullback the 200 dma should hold (Open a long position)

GDX Daily Chart
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  • Daily oscillators are extremely overbought. It is wise to trim and trail if long, and wait for a pullback if no position is held

GDX Daily Momentum Chart
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