Since the December 2013 low in the gold miners the $19-$21 support/resistance level has been by far the most heavily traded price zone in the GDX:
I continue to believe that the gold mining sector is on the verge of a major resolution of the recent range. A resolution which is likely to occur this summer – this thesis is based on the following:
- The amount of time spent at the ~$20 level
- The amount of volume churned at this level increases the potential energy of any move away from this level (especially an up move)
- The last 2 times the 50-day and 200-day simple moving averages in GDX were flat and narrowing (coming closer together) a big move was right around the corner (February 2012, June 2014)
A decisive rally above the $21.25-$21.50 resistance area would be a powerful bullish omen, whereas, a break below the recent uptrending channel and the May low at $19.28 would likely indicate that we are in for more of the same messy sideways-to-downward consolidation we have been experiencing for much of the last year:
