Using the GDX and GDXJ daily charts, I thought I’d show some previous examples of bull flags so that now we can note potential bear flags. This is of course all speculation because a pattern isn’t activated until it resolves, but for reference here is an update from June 28 in which we noted several potential bull flags, which went on to resolve as expected.
The main reason I think this could resolve negatively is because yesterday’s up volume did not meet Wednesday’s down volume and today’s volume looks weak as well. That’s what flags do; they are generally built on declining volume (bullish ones on declining down volume and bearish ones on declining up volume).
To be a gold stock bull personally, I’d like to see those 50 day averages tested. Recall that the rally may or may not have significantly higher to go but that does not preclude an interim drop to the MA 50’s. I am not predicting here, just interpreting the daily charts to aid your decision making.