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GDX Bearish Pennant Breakdown Likely

As posted in the trading room earlier today, there just weren't any significant technical developments in the equity market worth noting today with prices nearly flat on unusually low volume. However, GDX (gold miners ETF) has set up in a pattern which is certainly worth monitoring, this bear flag/pennant continuation pattern that has formed on the 60-minute time frame following the breakdown below the primary uptrend line off the January lows.


Coincidentally or not, the measured target for the pennant pattern would be right to my 21.40 target. The fact that GLD (Gold ETF) has continued to close lower every single day since breaking down below the large bearish rising wedge pattern on the daily time frame increases the odds that GDX will most likely go on to breakdown below the pattern & continue lower in the coming trading sessions. Counter-trend bounces aside, GLD still appears headed to at least the 116 level.

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May 23, 2016 9:35pm|Categories: Completed Trades - Short, Gold & Commodities|Tags: , |7 Comments

7 Comments

  1. Omdavis21 May 23, 2016 10:08 pm at 10:08 pm

    looks like a good call. Thanks Randy

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    • rsotc May 24, 2016 9:08 am at 9:08 am

      With gold moving lower overnight & the miners following in pre-market today, GDX is currently poised to gap down below the flag pattern today.

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  2. GetItRiight May 24, 2016 9:18 am at 9:18 am

    What do you see as an objective short add on area on GDX?

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    • rsotc May 24, 2016 9:31 am at 9:31 am

      The most objective add-on would have been on a breakdown beneath the wedge earlier this morning in pre-market when GDX started trading around 23.60. That put it below the wedge & the fact GLD was trading down helped to confirm the breakdown. One could still add here around the open but the farther prices move below the pattern, the less objective the entry or add-on. 23.23ish is a minor support level so maybe wait until GDX trades below 23.20 before adding OR add on a backtest of the pattern.

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  3. GetItRiight May 24, 2016 9:35 am at 9:35 am

    I just sold at GDX 23.30. The way GDX has been behaving lately, I am sure it will backtest that wedge, so I will watch for the 23.65 level, then I will buy back in.

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  4. Teeps01 May 24, 2016 4:39 pm at 4:39 pm

    Very nice call yesterday Randy. Do you expect a reaction bounce at your target?

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    • rsotc May 25, 2016 10:17 am at 10:17 am

      @teeps01 – If GDX makes it down to the 21.20 area, especially if that corresponds to a move to 115.70-116.00 in GLD, I would definitely expect a significant reaction & quite possible the end of the pullback in GDX. Although I might cover before then, if not I will have closed my entire short position just above that level as the R/R to remain short at that point just wouldn’t be favorable anymore.

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