GDX ETF Looking Bearish…Ready To Fall 25%

April 27, 2017

Gold has lost 1.5% since the close last week. The French election outcome supported risk assets, and traditional safe havens like gold, US Treasuries and the Yen got sold.

InvestingHaven’s research team forecasted that both gold was close to a new bullish or bearish trend, based on the chart setup seen in the article. Just three weeks after that forecast, the first bearish sign in the gold mining ETF GDX became visible: GDXJ is weakening against GDX, and that is a sign of less appetite for junior gold miners (a bearish sign for the whole sector).

There is a high chance that this is the start of a new bearish trend in precious metals, at least a tactical bear market, after the tactical bull market of spring 2016.

From a secular perspective, gold, silver and miners are still in a long-term bear market, notwithstanding tactical interim bull markets.

From a tactical point of view, InvestingHaven sees a new bear market given that GDX was not able to pierce through the strong resistance area indicated in light red on below chart. That area was identified a long time ago as THE most important price area for gold miners, and, hence, the whole precious metals sector (given that miners tend to lead the metals). That was explained in more detail in this article, released in January, showing the gold mining stock ETF GDX resistance area.

Given the current chart setup, and the increased appetite in risk assets after the French election, InvestingHaven sees the GDX ETF falling to 17.50 points, which is the secular support level indicated with the purple line. That is a 25 percent decline from current levels. If that scenario will come true, it is likely to offer a great entry point as it would set a higher low compared to January 2016. This scenario is also in line with our gold miners forecast 2017.

******** 

One cubic foot of gold weighs more than half a ton (1,306 pounds).