GDXJ Junior Gold Miners Weekly Chart H&S

This year we watched the top occur for GDXJ in April in real-time, receiving the negative divergence smack down as the red lines show. The blue lines clearly show a textbook--at least so far--H&S pattern in play. The head at 42 and neckline at 32 targets 22. Note how the 32 neckline failed, and then price came up for the back kiss, and failed again ushering in the continued weakness and likely target to 22.

The teal lines over the last month show a positive divergence bounce although the purple lines want to see lower lows for price. A gap fill is needed at 29 but the gold and mining charts are so full of gaps they look like swiss cheese, so they are not pertinent to the analysis. The green arrow shows the announcement of QE2 and how it rocket-launched the GDXJ. When Chairman Bernanke says his quantitative easing had no effect on asset inflation this chart clearly shows that statement to be in error. QE2 sent the commodities into bubble territory, that popped. If further quantitative easing is announced, GDXJ may be an attractive play with a repeat of the green arrow occurring.

Current projection, however, is not so rosie. Target remains at 22 for the weeks and months ahead. The 20 week MA under the 50 week MA is very bearish. At lower prices, the juniors will be much more attractive for takeovers which in turn will bounce the index strongly again. GDXJ will be an attractive long from the 22-24 area. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.