Sunday, July 19, 2015

GDX Gold Miners ETF Weekly Chart Downward-Sloping Channel Lower Band Violation

The gold miners are crushed in concert with gold over the last month as the US dollar index catapults higher. The technical analysis on the miners is similar to the metal itself in the previous gold post. The red lines show a 2-year downtrend in place with the downward-sloping channel. Price is at the lower channel rail. Price is violating the lower band so a move to the center band, at a minimum, at 18.83 and dropping is in play.

The green lines show positive divergence in the multi-month time frame which is bullish, however, over the last month, due to the rising dollar, the indicators are weak and bleak (red liens) wanting to see lower lows in price after any bounce occurs. The GDX is at record lows not seen since early 2009 in the heart of the stock market crash. In March 2009, former Fed Chairman Bernanke started printing money with QE1 to destroy the dollar and goose the stock market, which he did, and gold catapulted higher.

Note the money flow printing a lower low in November of last year (red line). this indicator told you that price wanted to come back down again after a bounce occurs due to the possie d with the other indicators. The bounce occurs and gold started the year on a positive note, but that weak and bleak profile on the money flow dragged price back down to the current lows. Money flow is now positively diverged across the last nine months which is bullish. The miners appear to be a waiting game just like the metal itself. It is not prudent to short at this point and price will need at least a couple weeks to wash out for a tradeable bottom. Patience is probably the key word if you are a gold bug and gold miner enthusiast. The GDX may become more tradeable from the long side in early August.

The same technical analysis holds for NUGT but as a general rule all 3x ETF's and ETN's should not be played in the stock market. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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