Gold Miner ETF Pulls Back but the Trend Seems IntactGold and silver have been explosive recently as the U.S. dollar slides and the Federal Reserve keeps interest rates low. The Market Vectors Gold Miners ETF pulled back between August 6-11, not a surprise given the pace of its rally. But the trend remained intact and now momentum followers may be active.
Last week’s retreat landed GDX back around the July 9 peaks, which briefly offered resistance before the ETF broke out to new seven-year highs.
The candlesticks on August 11 and 12 are also interesting. Both looked bearish on the surface because GDX closed at the lows. However the second day formed an inside bar. It’s similar (not exactly) to a morning star pattern, with short-term bearishness exhausting itself at a key support level.
Meanwhile, stochastics showed deeply oversold conditions at the same time.
GDX leaped yesterday. It tried to jump again this morning, but the bulls were too eager. Profit-takers drove it down early but they did no damage to the bullish trend. Now buyers are defending the 20-day simple moving average (SMA).
Finally, currency markets support the strength in precious metals, with the U.S. Dollar Index hitting a new two-year low today.
