Jeff Clark's Market Minute

Here Comes a Golden Bounce

The gold sector is overdue for a short-term bounce. But, after that, there’s more downside ahead. 

Let me explain…

Corrections in the gold sector typically unfold in three distinct “legs.” The first leg is a steep decline from the top. That’s what we’ve seen over the past week and a half. And, for reasons I’ll explain in a moment, that first decline phase should end soon – like today or tomorrow – and then be followed by the second “leg,” which is an oversold bounce off of support.

Recommended Link
ad_img

BUY… BUY… BUY… (Tiny $0.01 Crypto)
LIVE on September 18, the #1 most trusted expert in cryptocurrency, has agreed to share the name of his new #1 pick with you — for FREE. Write this crypto’s name down.

Once that bounce ends, then we’ll get the third “leg” of the correction. That will be a deeper decline to an even lower low that exhausts the selling and eventually sets the stage for a new rally phase.

Here’s an updated look at the chart of the VanEck Vectors Gold Miners Fund (GDX) I showed you right before the gold sector started selling off. I’ve added some lines indicating my best “guess” as to how the rest of the decline will unfold…

GDX broke its rising wedge pattern to the downside. And it sliced right through the first support level at $28. Now, the stock is approaching its second support level at about $26.25 or so. And the MACD and CCI indicators at the bottom of the chart have dipped into oversold territory.

So, there’s a good chance we’re nearing the end of the first leg down. And, we’ll soon see a bounce in GDX back up towards its former support line, now resistance, near $28.

The prospects of a bounce are supported by this 60-minute chart of GDX…

This chart shows a falling wedge pattern with positive divergence on the MACD and RSI indicators. This sort of setup often leads to a breakout to the upside. If that happens here, then GDX should be able to rally back up towards $28 or even $28.50 per share – which lines up nicely with the resistance line on the daily chart.

Patterns on 60-minute charts tend to play out within four or five days. So, I expect we’ll see a bounce get started in GDX sometime early this week. 

Following that bounce, though, traders should be on the lookout for the third leg of the gold stock correction. As I said earlier… There’s more downside ahead for the sector.

Best regards and good trading,

Jeff Clark

Reader Mailbag

Today, a subscriber comments on Jeff’s Market Minute

The Market Minute is so much of a boon to investors… Jeff is so precise and accurate with his technical analysis that I always look forward to receiving it. Please continue to send it to me.

– Francis

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at [email protected].

In Case You Missed It…

Want This View in YOUR Backyard? Here’s How…

Try out my "3-Stock Retirement Blueprint."

In short: It’s a way to generate thousands of dollars every year… using just 3 stocks.

I’ve been using this strategy for years.

It helped me retire at 42… and I continue to use it to make thousands of dollars every year.

I’m revealing how it works… and I’m even giving away the names and tickers of the 3 stocks you need to get started. — Millionaire trader, Jeff Clark.

Yes, show me the 3 stocks.

Jeff Clark's Market Minute Archives

Jeff’s intuitive feel for short term market swings and his strong protective discipline have allowed me to lock in thousands of dollars in gains where I might otherwise have just ridden the markets up and down .”  -Chris, a reader and “seasoned investment advisor” from Seattle

Jeff -- your picks and analysis have been nothing short of amazing. I have traded the market for many years but I must admit, I have NEVER seen something this good.” - Mike H.

In only 2 weeks of using the service I’ve booked over $10K in profits. Needless to say I’ve paid for my membership.” - Tony J.

I started following Delta Direct about 3 weeks ago… I bought a small investment from one afternoon to the next morning. About 11AM I got out and made 8K in less than 24 hours.” – D. Tilghman