We cited the bullish potential in late last year. This played out as expected, but there hasn’t been any follow-through. Now some bearish patterns are taking hold.
This chart shows the downward trend line in the Market Vectors Gold Miners ETF. Notice how the latest rally tried and failed to push above it.
Next is the rising channel in place since late November as GDX clung to the 200-day simple moving average (SMA). That pattern is starting to look like a bearish flag, with the potential for a breakdown if the late-December lows give way.
Third, notice how the 50-day SMA just slid below the 200-day SMA. That’s a bearish “death cross” pattern.
Even more things are happening off the chart than on it. After all, the U.S. dollar feel steadily in November and December. Gold’s inability to rally with that favorable backdrop is potentially bearish.
Next, the greenback is showing signs of bottoming. If it were to keep bouncing, that could also hurt gold.
Finally, Bitcoin doubled in price between December 15 and January 8 as GDX did nothing. BTC’s relative strength, combined with the drumbeat of institutional adoption, suggests a real sea change is taking place before our eyes. The next few months could be important in the history of money!
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