Yesterday I warned my followers and visitors that GDX had a chance to complete a Head & Shoulders pattern on the weekly time frame. It did today by closing at 31.12, just 10 pips below the required level of 31.22.
In my previous weekly update I mentioned that the closure below 33.25 would reinforce the bearish pressure on the monthly and weekly time frames from the candles perspective. Well, it did, and both the monthly and weekly charts look like a bear paradise for at least one month.
Some aggravating factors include:
1. A death cross of the daily 100 MA below 200 MA.
2. Daily, Weekly and Monthly RSI show the downtrend, supporting the movements of price.
3. The weekly 8 and 20 EMA almost vertically crossed the 50 MA. Makes one think.
4. On the monthly chart, the price broke below 20 EMA. There is a good chance the monthly PSAR will flip to the dark side first thing on Monday.
The Mid Term chart has not changed since the last week update. I am viewing the stock could quickly fall to 21-23 area, marked with a rectangle, followed by further decline to 12-14.
As you can see on the weekly chart at the top, a measured decline by the Head & Shoulders targets 16.54, and it is in alignment with the price projection by the wave and channel method.
The channel also helps to project the time frame for the decline, which would be 2-6 months from now.
There are no changes on the Very Long Term chart since it was published in the end of October 2020.
One interesting point is worth noting. If you are an Elliott Wave practitioner, you would understand the extreme importance of price crossing below 31.79, the August 2016 high. It technically invalidates the motive counts off the 2016 low.
In summary, I am expecting a continued downtrend for the next 2, possibly 6 months, depending on the wave structure. There is the bearish pressure on the quarterly, monthly, weekly and daily time frames. I talked about the quarterly on January 18, 2020.
Speaking about March 1, I would not be surprised if it opens with a gap down. Let’s call it an educated guess.
Good luck with trading!
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