We projected a coming pullback for the hysterically overbought miners (GDX, per this update) and gold. It is here, and it is good. The update shows support for GDX in the 23-24 range and I think that is still a good projection. Not a prediction, but a projection for a healthy pullback.
As for gold, it continues to ease this morning and while I am not sure of the timing (i.e. a quick and possibly harsh pullback or a grind over days and/or weeks) there are some logical levels to watch for.
- 1378 was the big picture breakout ‘creek jump’ point.
- 1355 is the 50% retrace of the spike rally (launch) from early May, and it matches up well with the support zone between 1350 and 1378.
- And then there is the 62% Fib at 1335 and the up-turning SMA 50 (1313 and rising).
Gold became very overbought and needs this pullback for the longevity of a greater rally. With the pressure of a 7 year bear market we cannot discount the possibility that pullbacks will be quick and less painful, because there had been a lot of pressure built up over those years in this then-forgotten asset. So gold (and the miners for that matter) could get a quickie and remain overbought (while lugging it’s contrary bearish CoT situation), but it would be best to be prepared for a major support test in the 1350 to 1378 area. Click the chart for a clear view.
