GDX has exhausted its rally and ready to correct.
Comment:
Gold miners stock gaped down today as expected. There was an attempt to close the gap on lower volumes as gold was pushed back from $1278 resistance. Here is recap:
- GDX succeeded to reach previous day close price but closed lower being sold off last minutes
- ABX couldn't reach previous day close and closed lower on low volume.
- GG - couldn't reach previous day close and closed lower and below 50 day moving average.
- NEM - couldn't reach previous day close and closed lower moving further down from trend line.
- KGC - couldn't reach previous day close and closed lower on 50 days moving average.
- AUY - succeeded to reach previous day close price and closed at that price. Volume was low. On TSX YRI closed lower.
- GOLD (RANDGOLD) raised stronger than others and posted bullish engulfing candle but on low volume and at the top not at the bottom. I would discount that for now but watch next day.
Overall picture is bearish. All that Thursday, Friday volume that exchanged hands still hoping for gold price to rise. But the up move in mining stocks is very limited and unlikely while the down move risk is big. Any gold's attempt to test $1278 resistance will push stock to sell further. Breaking it will trigger big move.
I expect Yellen to talk DXY up tomorrow and on Wednessday which will put additional downward pressure on gold and mining stocks.
Other things to consider:
- DAX had a breakaway gap from 200 weekly moving average with no attempt to close it. So I expect it to continue running putting downward pressure on EURUSD.
- NKY (NIKKEI) - had an inside bar reversal today and close above the previous day candle, I also expect this run to continue putting downward pressure on Yen
Looks like money starting moving away from risk off assets back to work, predicting Brexit result.
- GDX succeeded to reach previous day close price but closed lower being sold off last minutes
- ABX couldn't reach previous day close and closed lower on low volume.
- GG - couldn't reach previous day close and closed lower and below 50 day moving average.
- NEM - couldn't reach previous day close and closed lower moving further down from trend line.
- KGC - couldn't reach previous day close and closed lower on 50 days moving average.
- AUY - succeeded to reach previous day close price and closed at that price. Volume was low. On TSX YRI closed lower.
- GOLD (RANDGOLD) raised stronger than others and posted bullish engulfing candle but on low volume and at the top not at the bottom. I would discount that for now but watch next day.
Overall picture is bearish. All that Thursday, Friday volume that exchanged hands still hoping for gold price to rise. But the up move in mining stocks is very limited and unlikely while the down move risk is big. Any gold's attempt to test $1278 resistance will push stock to sell further. Breaking it will trigger big move.
I expect Yellen to talk DXY up tomorrow and on Wednessday which will put additional downward pressure on gold and mining stocks.
Other things to consider:
- DAX had a breakaway gap from 200 weekly moving average with no attempt to close it. So I expect it to continue running putting downward pressure on EURUSD.
- NKY (NIKKEI) - had an inside bar reversal today and close above the previous day candle, I also expect this run to continue putting downward pressure on Yen
Looks like money starting moving away from risk off assets back to work, predicting Brexit result.
Unlike GDX, individual gold miners has sold off on much bigger volume on Friday. Lower capital stock like KGC, AUY posted ALL TIME RECORD volume (60mln, 55mln) and has confirmed key reversal by closing lower next day.
I expect gold mining stocks and GDX to gap down painting island reversal and fall without looking back. The reason for that a huge volume that was bought on Thursday and Friday on hope for a bounce will realize that gold is not going to rise anymore before Brexit vote, will be scared in the morning and sell to stop losses.