GDX closed on Friday with a Dark Cloud Cover, flipping the daily odds to the dark side. Will the dark forces prevail next week? Let’s have a closer look.
This post is part of the Weekly Analyses series that InvestingAngles offers to followers and subscribers. The series covers US major indices – SP500, Dow Jones, Nasdaq, Russell 2000; VIX, DXY, gold & silver, GDX, natural gas, Bitcoin and Ethereum, and some large cap stocks.
This Weekly Analysis contains:
– an overview of daily and weekly candle charts and TA;
– a long term $GDX forecast, unchanged for 15 months;
– a short term projection and targets.
TA & CANDLES
The Yearly, quarterly and January monthly GDX candles are bearish and the long term bearish pressure is substantial. The developing February candle is bullish for now and if it closes above $33.19, it could flip the mid/long term trend. As I type, GDX is $34.50 and there are 6 days to go.
On Friday GDX made a Dark Cloud Cover that, provided its technical position, has a good chance to be confirmed. An unclosed gap and a few other factors could play a major role in the next few days.
A daily closure:
– below $33.78 would confirm a bearish reversal;
– above $34.85 would resume the uptrend;
– a gap down and a red candle would be a major bearish signal, possible reversal of the weekly trend.
On Feb 18 GDX formed Three White Soldiers that are considered a strong bullish continuation combo. However, if the daily reversal confirmed, the weekly has a chance to be reversed either, especially from the perspective of the 50/100 weekly MA bearish cross. Odds: Bullish-Neutral
The long term chart (below) remains unchanged for 15 months. There is a chance that GDX is working on an Ending Diagonal for wave (C) to complete the very long correction that started in year 2011. Based on the projection, the process could take another year or two.
This is a zoomed in the wave that started in July 2020 on a 3-day chart. As GDX made a new higher high, I updated the chart and added one more path to track
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Red path (primary):
Hypothesis: A standard motive wave (C), wave 1 was a diagonal. Wave (ii) completed with an almost ideal regular flat, expecting an acceleration downwards.
If this is the path, we should see a confirmation next week.
Hypothesis: An ending diagonal wave (C), waves 1, 2 and a-b of 3 completed. Next wave c of 3.
As the red and green are almost identical for the next move, it will take a while to receive a clear confirmation for each of them
Hypothesis: GDX completed the correction ABC and is in the middle of wave iii.
There are challenges with fitting this scenario into the bigger picture and it also lacks support from indicators. Low probability for now.
The odds are bearish on the larger frames and are bullish-neutral on the smaller ones. Based on that, I view the current rally as a short-term one until proven otherwise. In order to confirm the long-term bullish path, GDX needs to flip the odds bullish on the monthly frame that would be quite possible in February is the rally continues.
At this point I am viewing the area of $19-12 as a possible target for the next move down, as per the long term chart. Timing – summer 2022- end of 2023.
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