Before I start discussing the options on the table, I would like to refer to the previous weekly forecast that can be fully viewed here: https://investingangles.com/2021/03/14/gdx-weekly-14-03-2021/
- If the next week closes above 34.35, the reversal of 7-month bearish trend would be confirmed.
- If the next week closes with a green candle, but below 34.35, the confirmation is likely to be received one week later.
- If the week closes with a red candle, the odds would flip to the bearish side with possible continuation of the 7-month bear trend.
This week closed with the second option (highlighted in blue) and I would like to explore it from the perspective of monthly, weekly and daily candles.
There is obvious bearish pressure on the monthly scale. The price is below the monthly 20 EMA; the RSI supports the price movements; the PSAR is on the bearish side, and a few other indicators support the bearish stance.
However, by the middle of the month, the price recovered above the 8 EMA. At the same time, the current candle is positioned to possibly produce a Bullish Harami. If this happens at the monthly closure, I would consider the odds on the bullish side, especially if it closes above 34.35 or above the 20 EMA (now 34.53).
Odds: Moderate Bearish
The weekly green candle was rejected at the pre-defined 34.35 level and closed above the 8 EMA for the first time since the first week of November. This is, obviously, a very promising sign. RSI seems to be recovering as well.
However, a declining volume over the last three weeks is somewhat concerning.
The price is clearly in the inflection zone between 34.35 and 31.22. A decisive break through any of them next week would set a direction for the stock.
Though the last two daily candles are green, their bodies and wicks are entirely within the body of the large Wednesday’s candle. I view them both as the combination of Bearish Harami that keeps the odds on the bearish side. In addition, the last three candles were rejected at the level of 50 MA and volume does not support well the increase in price.
On the positive side, the price keeps moving above the 20 EMA after the 8/20 EMA cross on Monday.
Odds: Cautiously Bearish
The next week seems to be the defining week for the stock direction.
- If GDX closes above 34.35 and/or above the weekly 20 EMA, the reversal would be confirmed.
- If GDX closes below 31.22, the bearish trend would resume.
- If the stock closes between 31.22 and 34.35, the decision is likely to be moved to the last day of the month.
I am going to post the charts with the perspective targets as soon as GDX decides which way it wants to develop.
For the next week, I am Neutral-Cautiously Bearish, waiting for direction.