Shortly after covering GDX (Gold Miners ETF) in the Market Update video earlier today, the miners, which were trading positive at the time, pulled a 180 & took a dive for a round trip of over 4% so far today. While the day isn’t over, with about 1 hour left in the trading session, should GDX hold or move lower into close it will have printed a bearish engulfing candlestick. Should the miners close the day red & continue lower into next week, in addition to confirming the bearish engulfing candlestick (a potential reversal or topping candle) we will most likely see these second, consecutive negative divergences on the MACD & RSI confirmed as well.
Something else worth mentioning that I didn’t cover in the video earlier today is the fact that after I adjusted the Fibonacci retracement levels to include the recent marginal new high, I noticed that the key 38.2% retracement level (which I was also targeting) now comes in exactly with the 21.45 support level that I was also targeting for the pullback following the recent wedge breakdown, making that level like a magnet or black hole, should GDX start to move lower & approach it. Again, looking for a red close today, ideally below yesterday’s low in order to finalize that bearish engulfing reversal candlestick, followed by additional downside early next week in order to confirm the engulfing candlestick as well as the potential divergences that are forming.
One thing to monitor though is the fact that gold is trading higher today (GLD up 0.58% right now), despite a strong rally in the dollar. I’ll try to follow up with additional analysis on gold & the dollar later today or over the weekend.