GDX Miners – Technical Analysis
Are bears done with the Miners?
Last week, GDX made a move that is difficult to ignore. An impulse from the recent lows may mark the start of a meaningful rally.
In this report, we evaluate the latest signals across multiple domains and examine the setup from several technical angles.
Candles & TA
Over the last two days, GDX formed candles that are difficult to ignore. A Bullish Engulfing on the daily frame was immediately followed by a Bullish Engulfing on the 2D frame. As a result, the weekly formed a solid Inverted Hammer, which, if confirmed next week, could provide a strong foundation for a reversal.
The larger frames — monthly and above — remain the main bearish risk. However, considering the signals that developed on the short- and mid-term frames, the technical landscape has fair odds of changing during the remaining days of June. We will discuss those frames once the monthly prints are carved in stone.
Overall, GDX is bullish short-term, with expanding momentum. Next week is important for a key confirmation on the mid-term weekly frame.
Technicals are still pointing downward, but early signs of recovery are emerging. For now, we will focus on candles, as they are usually the first to alert us to changes, while most technicals tend to lag.
Elliott Waves
As GDX is a fairly new ETF, it does not have the same statistical depth as Gold, with its luxury of 50 years of data. But I do my best.
Most likely, GDX made a very significant bottom in January 2016 and has been developing in an impulsive manner since. The sharp and quick advances, marked as waves 1 and i, were followed by lengthy corrective waves 2 and ii, respectively. The wave that started in 2022 can be viewed as wave iii of 3, and it has all the qualities of one.
The recent pullback wave? Multiple technicals are flashing consistent signals that the recent pullback was likely wave iv under the primary scenario, or possibly wave 4. This means the impulse GDX developed off the bottom could be the beginning of either wave v or wave 5. On the chart, I am showing only the primary scenario to keep it cleaner.
If this scenario materializes, and we get confirmation on the weekly frame while mitigating bearish odds on the long-term frames at the end of June, the rally could be very material. Wave v could lift Miners about 60% over the next 3–5 months. My current estimated top for wave v of 3 is purely geometrical and preliminary. We know that timing is the most challenging part of any forecast. We also remember that fifth waves in commodities tend to stretch longer than third waves.
The larger bottom is not confirmed yet. The key events will be next week’s weekly close and the monthly prints. If the monthly bearish odds are not mitigated, we may need to bring the bear suit out of the closet.
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