Gold bugs’ hearts are breaking everywhere.
When we looked at the gold sector last week, we noted that GDX – the gold stock ETF – was on the verge of breaking out of a consolidating triangle pattern. One way or another, GDX was set to make a big move last week.
To the delight of the gold stock bulls, GDX blasted higher on Monday and Tuesday. The stock gained nearly 3% in two days. GDX challenged its February high at $23.40. And with the bullish wind of a dovish Federal Reserve at its back, the gold sector looked certain to start a new rally phase.
But, the market never makes it so easy.
GDX couldn’t follow through to the upside on Wednesday. Then, on Thursday, the gold sector gave back all of its gains from earlier in the week. The gold stock breakout had turned into a fake out. The sector now looks poised to crush the spirits of the gold bugs.
Here’s an updated look at the GDX chart I showed you last week…
The bullish breakout early last week ran right into resistance at the previous high. GDX reversed, fell back into its triangle pattern, and ended the week testing its support line.
GDX needs to bounce – right now – if there’s any hope of it starting a new rally phase anytime soon. A close below the support line of the consolidating triangle pattern should lead to an immediate test of the March low at about $21.50 per share, and possibly a move down towards $20.50 over the next several days.
The bulls still have a chance – if GDX can bounce right away. Otherwise, it looks like last week’s action was a false move that may have formed a more significant intermediate-term top for the gold sector.
Best regards and good trading,
How have you been trading gold? Do you think it’s ready to break out or fake out?
And as always, you can send any other trading questions, suggestions, or stories to [email protected].
$12.3 Trillion of New Wealth…
Here’s something the mainstream media won’t tell you…
A new technological breakthrough is expected to unlock $12.3 trillion in new wealth, giving it the potential to be the single-best investment opportunity of 2019.
And this Silicon Valley insider has discovered the one small company that is perfectly positioned to profit from this mountain of money… but you’ll want to act quickly. Read on here.