The gold sector is doing a fine job of working off its short-term overbought condition.
The VanEck Vectors Gold Miners Fund (GDX) hasn’t gone anywhere for a few days. It’s pulled back only slightly off of its recent high, and away from its upper Bollinger Band.
Meanwhile, since GDX spent most of last week just chopping back and forth and consolidating the recent rally, its 9-day exponential moving average (EMA) has had a chance to catch up to the current price.
Here’s an updated chart… 
Compare the recent action to the same period last year. The rally off of the December bottom is equally as sharp.
And in January 2017, GDX ran into resistance at its upper Bollinger Band, then found support at its 9-day EMA. And, despite still having overbought conditions on technical indicators like the MACD and RSI, GDX pushed higher once again off of its 9-day EMA.
While I’d prefer to see more of a pullback in the sector – perhaps down to the 50-day moving average (MA) – before adding more exposure, that may not happen. The seasonal forces may be strong enough to fuel another push higher from here.
I’m not doing anything yet. The dollar had a good day yesterday, and it looks like it could push higher over the next session or two. That would likely pressure the gold price lower and maybe get GDX to drop just below its 9-day EMA.
But, traders probably shouldn’t wait for a test of the 50-day MA before adding more exposure in anticipation of a stronger rally.
GDX has support near $23.25. That may be a good spot at which to nibble a bit more.
Best regards and good trading,
Jeff Clark