GDX Gold Miners ETF Daily Chart; Cup and Handle (C&H)

GDX, the gold miners ETF, prints a textbook C&H (blue) with the break-out line at 20.40 and the base at, to keep the math simple, 17.40. That is 3 points of height for the coffee cup. Thus, if GDX breaks out above 20.40, price will target 23.40.

The green lines show the universal possie d on Labor Day. Keystone did not see this at the time; probably from spending too much time at the local lake swimming. In early September, the indicators were all positively diverged, price is below the moving average ribbon and price violates the lower standard deviation band (pink). So you knew it was a very high probability trade for success on the long side and boooiinnngg, GDX launches higher in early September.

Price staggers through the 18.5-20.4 sideways channel for the last 2-1/2 months. The C&H pattern will be nullified if GDX drops below 18.50. GDX violates the upper standard deviation band so the middle band at 19.26 is in play over the VST. As price matches the high from October, the indicators are mixed generally favoring neggie d so price may be soggy for a few days.

GDX went through all the trouble to battle back from the bottom and is in the neighborhood of the 200-day MA at 20.80, you would think that price would knock on the door and say hello.

Keystone does not have a position in GDX. Perhaps the approach is to wait for a little pullback to that middle band at 19.26, which is also the 20-day MA. The GDX weekly chart is agreeable for the rally on a weekly basis to continue. On the GDX weekly chart, the 50-week MA, 200-week and the upper standard deviation band all form a confluence at 20.92-21.23 which may act as a magnet for price going forward.

Keystone will simply watch the price action progress. If GDX drops, a potential buy is at the 19.26-ish level. If price breaks out higher (and the weekly chart is agreeable to more upside ahead), a long position can be bot, or scaled into. One method of scaling into a breakout is to buy in three increments. First, buy the breakout (orange), in this example 20.4-ish. Then wait for price to typically make a back kiss and buy that back test. Then, when price rallies higher and overtakes that initial breakout high, buy at that point. It will be interesting to see if the GDX plays out in the weeks ahead with miners striking it rich at 23.4 as spring arrives. 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.