In this edition of our newsletter, as a follow-up to our post last month about the gold ETF and futures, we're looking at the VanEck Vectors Gold Miners ETF (symbol GDX). The two markets often move in parallel. We also show an updated chart for gold futures here.
For GDX and the gold ETF, we're tentatively counting the decline from the 2020 high as the start of a larger downward impulsive move. In both cases, initial wave (i) counts best as a leading diagonal pattern.
Since GDX found support at 31.20, we consider that downward wave (i) might be complete. The first resistance for a wave (ii) bounce sits nearby at 36.30. If price puts in a downward retracement from the current area, then we'd watch for it to find support fairly close to the wave (i) low – either above it or slightly beneath it. A typical retracement level to watch for that is 32.50.
If GDX is able to overcome nearby resistance sometime during the next few months, then the next higher areas to watch sit near 39.30 and 40.10. That would present a more nicely proportioned wave (ii) in the downward sequence.
A very approximate area to watch as a lower stepping stone awaits near 22.70, although that level will be subject to refinement on future charts.
Turning to gold futures, we see some response to the support we identified in the previous newsletter. However, it may be time for a minor downward correction, as suggested by the high position of the Lomb periodogram on the weekly chart below.
Remember, we're provisionally treating the decline in gold futures from last year as wave (i) of a larger five-wave downward pattern. Gold bulls, on the other hand, hope the recent low marked the end of a fourth wave that precedes a higher high.
If our medium-term bearish count is correct, then price might be nearing completion of sub-wave 'a' of (ii) in the larger downward sequence. Near-term bearish traders should watch resistance at 1792.70 and 1805.90. A break of 1750.60 could lead to a test of next support at 1709.00.
Eventually we would like to see price bounce in sub-wave 'c' of (ii), possibly heading into summer or autumn.
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