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Euro Backtesting Wedge + GDX Trendline Backtest

The reaction off the 2nd support level following the wedge breakdown perfectly coincided with a backtest of the primary downtrend line in GDX.. hence the bounce in the miners.

EUR-USD 60-minute 3 Feb 10th

EUR-USD 60-minute 3 Feb 10th

A perfect kiss of the primary downtrend line from 2012 to produce the typical reaction of the initial tag of a key support level from above. While this bounce could carry a little higher, I still favor a continued move down to at least the 15.80 level. (The backtest in GDX was pointed out while it was occurring in the comments section under the US Dollar Could Spark a Rally.. post from earlier today).

GDX daily Feb 10th

GDX daily Feb 10th

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Feb 10, 2016 11:51am|Categories: Forex (Currencies), Gold & Commodities|Tags: , , , , , |2 Comments

2 Comments

  1. RickySixx6 February 10, 2016 11:56 am at 11:56 am

    I’m surprised you’re marking 15.80 and not 15.35 which represents a filling of the Feb 3 -> Feb 4 Gap Is there a reason for that or are gaps fills not always a target to focus on?

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  2. rsotc February 10, 2016 12:06 pm at 12:06 pm

    A couple of reasons: 1) 15.80 is only my minimum downside target. Yes, the next logical target would be the bottom of the Feb 3/4 gap. 2) 15.80ish is also the top of that gap. Tops of gaps often act as support when initially backtested from above. 3)15.80 is horizontal price support, defined by numerous reactions and gaps going all the way back to the July 17/20 gap in 2015. 4) 15.80 is also the 38.2% Fib retractment of the rip off the Jan 19 & 21st lows. Key Fib level + price support + top of gap = very good support level which is likely to be tested at least once before GDX goes on to new highs. Finally, to allow everyone who’s been dying to get long the miners step in & buy on that perfect backtest of that well-defined primary downtrend line is just a bit “too easy” in my book. Maybe that proves to be it for this pullback but I’m betting those who stepped in to buy that backtest will get burned.. very soon. JMHO & again, assuming GDX has more downside, I may extend my target(s).

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