Last week, GDX formed a Bearish Engulfing. This week, it was neither confirmed nor rejected. The odds are bearish though and the next week will be critical for the future direction. Let’s explore the hypothesis from the different Angles.
The monthly looks bullish so far, but some technical indicators have not yet fully recovered from the bear market. There is a chance of another wave downwards, but nothing is confirmed yet. The June’s closure should provide more clarity.
On June 4, GDX formed a clean Bearish Engulfing of a Spinning Top. Such powerful reversal combo would typically not require a confirmation. However, considering the bullish odds on the monthly time frame, I am being cautious.
This week neither rejected the Engulfing nor strongly confirmed it. I consider the closure on Jun 11 as “soft” confirmation and would wait until a week (possibly next) closes below $38.01 to confirm.
Today GDX formed a Bearish Harami and closed below the 20 EMA line. This strong bearish signal requires a confirmation in the next few days.
I am expecting a possible bullish action at the beginning of the week and the red candles closer to the end. Based on the minor waves, there is also a chance of an immediate move down. If the next week closes below 38.01 with a red candle, it would open a path to 31, 25, and even to 15, the most typical Fibonacci levels for corrective waves, as marked on the monthly chart. This would also mean that a multi-week/month decline is ahead.
There is a very similar candle structure in gold spot and gold futures.
However, if there is a strong rally with at least two green candles closing above 39.00, there is a good chance that the rally to a new ATH would resume.
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