NFTRH 903 got pretty wordy and not overly charty. So let’s update the daily chart technical situation in gold, GDX and silver as they stand in pre-market.
After taking a mini crash from the high of 5598 to the 50% Fib retrace level right between minor and major support levels, and testing the (blue) 50 day moving average, gold has rallied as anticipated. I have altered the original bear flag in favor of a new one.
Of course, this may not turn out to be a bear flag (Old Turkey: “It’s a bull market, you know”) and we can use volume on GLD or other gold price measures to help tell that story. Right now GLD’s volume is not compelling, but it did build just a bit on Friday (Op/Ex Friday, which can see volume spikes).
The other scenario here is that overbought conditions have been reset and gold would target new highs (Old Turkey). For now and to remain prepared, let’s think about the flag top in the 5300 area, which would serve as a test of the high.
GDX is targeting an open at 107.55 in pre-market. Our bear flag range is 108-110. The rally came from the bare minimum downside support coinciding with the 50 day moving average. The miners have fundamental justification for this relative strength, but technicals and funda are two different things. Technically, GDX is on a retest of its highs and nothing more at this time.
Here as well you can see that volume is not yet indicating firm conviction to the rally. As with gold, the miners have reset their overbought readings and it is possible that this reset launches a new bull market leg (Old Turkey). But I believe in taking things a step at a time rather than imposing my will on the situation.
The plan was rally allowance to 108-110 for a bear flag test of the highs. The plan could be altered to something more bullish. But only a new high that holds and is preferably driven by building volume would make that alteration.
To have more bullish conviction I’d have wanted a harder decline to clear support at the 50% (right grid) Fib and the 38% (left grid) Fib in the 81-82 area. Short of that, prove to me that you are bullish by taking out the high of 113.50 and leaving it behind.
Silver has broken out of the Triangle we ID’d in Friday’s pre-market NFTRH+ update. This bullish move has come after a glorious crash and smash into the 62% (right grid) retrace. The right grid measures from the ultimate low back in April, while the left grid, measured from the October low, retraced almost 78%. That is one hell of a tank job.
And it is for this reason more than any other that I want to be careful about calling bear flags on the above too confidently. As noted previously, silver can get manic and that is a lot of “potential” upside real estate in silver. If it were to retrace to, say 104 or so, how high could gold and GDX/HUI climb?
So as is often the case with the precious metals, it’s “watch silver”.
Side note: SLV’s volume profile is not compelling at this time either. It will need to build for a serious bullish case to ensue.
And while we’re at it, watch the Silver/Gold and Gold/Silver ratios. If Thing 1 breaks upward and Thing 2 breaks downward, we could party on. If Thing 2 is merely on a break from its rally, the party will likely end in decisive fashion.
Especially if it drags USD upward with it.
Finally, and not to be taken lightly from a sector internals perspective, the GDX/Gold ratio is completely intact to its intermediate and major uptrends. It is also positive in pre-market. So there’s that bullish consideration to end the update with.
