Are Gold Miners Setting Up for a Huge Reversal?

From Corey Rosenbloom: Gold miners have pulled back to a key technical level, and the next big move could signal a big reversal off of this year’s major rally.

Gold – and popular fund Market Vectors Gold Miners ETF (NYSE:GDX) – pulled back to a key support level.

Let’s chart the retracement (is it a reversal?) and pinpoint the critical level that will give us a big clue now.

The chart above shows the Gold Miners (GDX) in an uptrend all throughout 2016 along with Gold, seen on the lower chart window.

Though price continued higher through 2016, volume slowed down in a divergence, especially on the August high.

Look closely that on the high – yellow highlight – daily volume was under 50 million shares per day (among the lowest levels in 2016).

We also saw a persistent negative divergence in momentum into the August high.

These factors – at a minimum – suggest a steeper pullback (which is what occurred) and perhaps a reversal.

We’re focusing carefully on the $25.50/$26.00 level (green highlight).

If this retracement is complete, this is a great spot to buy GDX or individual gold mining companies – or perhaps gold itself.

If this is a reversal, then we’ll see a breakdown under this area and a departure swing “down away from” the $25.00 level.

As a trader, your job isn’t to predict but trade – and we use key levels as decision points to assess supply/demand.

Right now, focus on the green level and be ready for either outcome.

This article is brought to you courtesy of AfraidToTrade.com.

You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)

Powered by WPeMatico