GDX 15 minute Sept 17th
After hitting the first target/resistance level shortly after breaking above the 15 minute bullish falling wedge pattern last week, GDX pulled back to make a marginal new low. Although we didn’t get the immediate upside follow-thru that I was expecting, a potentially bullish case can still be made on GDX as even larger bullish divergences were put in place on yesterday’s new lows. I’ve redrawn the wedge pattern (new uppermost downtrend line) and the divergences on this updated 15-minute chart (the old lines from last week’s chart are now yellow) and my thoughts are summed up in this reply to a question on that unofficial 15-minute GDX trade from last week. Typically, “unofficial” trade ideas are those where my confidence is not a high as it is with the official trade ideas (those assigned to the Trade Setups and/or Active Trades categories).
Q: Randy, You had recently posted a short term trade idea for GDX bounce, resulting from oversold conditions along with three potential targets. Normally I sell my positions when each target is hit but this is such a small time-frame that I am debating if I should hold till T3 or to sell the same way when it reach a target and buy back at the pullback. What do you think ?
A: Tough to say as there isn’t a “one-size-fits-all” answer to that question. It’s really a matter of personal preference (trading style) and you overall take on where GDX might be headed . Although I had thought GDX would have already hit the second or third targets on that recently posted 15 minute chart by now, the trade is still intact with GDX only making a slightly lower low since entry (about 2% below the posted entry level). With that marginal new low even more powerful positive divergences were formed so GDX still has some bullish potential at this point although this trade can still go either way.
The bottom line is this: The second target/resistance level that I posted on that 15 minute chart which comes in around 25.00 is at the bottom of a thin zone. Therefore, if prices can manage to punch above the 25.10ish level, then GDX will likely hit the 25.70ish 3rd & final near-term target from that chart. As far loss mitigation, a move below yesterday’s lows of 23.68 could spark some additional selling so a stop slightly below that level, say 26.60-26.65, would be prudent.