The gold miners as represented by GDX printed a bearish reversal candlestick today after making a new 20-month high earlier in the trading session:
GDX (Daily)
This particular pattern is especially bearish for the following reasons:
- A new high followed by a close below the previous day’s low on heavy volume (and higher volume than the previous session).
- GDX has a strong track record of short term pullbacks after trading above its upper Bollinger Band.
- The recent highs in GDX have occurred with consecutive momentum divergences (RSI) and thinning volume.
- We have seen an increased level of acceptance of the gold rally among market participants in recent days with many suddenly holding a bullish view of the gold miners after a 92% gain within 3 months.
One day does not make a trend, however, today’s trading session is a yellow light warning signal. Let’s see how the week winds up.
Disclaimer
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Do your own due diligence and consult a licensed investment advisor prior to making investment decisions.