The GDX monthly closure neither confirmed nor rejected the downtrend started in June. There is a high possibility of continued decline in August. Let’s explore the hypothesis from different angles.
The Bearish Engulfing of June was a very powerful bearish statement. In July, however, gold was not able to produce a candle or combo that would signal a reversal. The July’s candle was likely a pause before resuming the downtrend. There is no strict rule and there is a possibility that the horizontal movement (or pause) extends for 1 or more months.
The monthly candle closed below 8m EMA for the second time in a row. Some technical indicators are bearish and some are rather neutral.
If GDX is to recover, a first sign would be an August closure above ~$37.
An interesting weekly closure yesterday. Normally, I would consider it as Bullish Engulfing. However, lacking the support from indicators and other signals, I think that the weekly candle is a Three-Line Strike, a bearish continuation combo.
The price was rejected at the 20w EMA line and RSI dropped below 50 in the final hours before the cut-off. The volume was just terrible in comparison to many previous weeks.
If the next week closes green and above 20w EMA, it would be a solid sign of recovery, though the probability for such scenario is rather low.
The daily candles formed a Bearish Harami after a gap. The indicators are mixed and there is no clear signal for the direction.
The price is trading just below 50/100/200 MA lines, all within 40 pips of each other. If the price breaks above these lines, the trend would likely be set.
While odds are slightly bearish, the chances are close to 50/50.
GDX continues to be under a strong bearish pressure on the monthly and a significant effort would be required to overcome this. Unless there is a strong bullish move in the first week, I am expecting GDX to continue down in August.
The long term targets continue to be the same as I identified several weeks ago – $31, $25, $15. The levels and forecasted counts are on the monthly chart.
Until I can see a strong bullish move on the monthly frame or at least a rally on weekly that would recover the long-term damage, the bearish odds remain in force.
A closure above $37 on August 31 would be the first step towards recovery.
The detailed previous Monthly and Weekly analyses with forecast can be found by the links below.
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Previous Monthly & Weekly: