We have been allowing for, if not planning on a decline by GDX to fill its gap and the sector in general to test support (below 29 on GDX and 235 +/- on HUI). But the preferred trigger to that would be for GDX to fill at least one of its upside gaps first. It came within a hair of the first one, but did not do so before turning down.
So it makes sense to look at this FOMC week pullback to evaluate when the odds would tip in favor of “no gap fill” before any decline. I am looking for a higher low to the January low (31.21) in order to keep the prospect of upside gap fill(s) going in the short-term. With GDX nesting right on the daily EMA 20 this level would be a good platform for that.
A drop below 31.21 increases the chances of a test of support #1 (around 29.60) and/or support #2 (around 28) sooner rather than later. A hold here could see GDX ram back upward through the 1st resistance area to at least fill gap #1, if not #2 above 36 as well. RSI, while pulling far back from overbought, is still green.
In my opinion, this week is decision time for GDX (and the sector) as pertains to the short-term. Regardless, at some point we’d want to be prepared for the possibility that the Golden Cross will precede a move in the opposite direction, as they so often do eventually, to hammer the momos and hangers on. But the higher low to January keeps the prospect of new highs first open.
