Monday, January 04, 2016

Gold Miners ($GDM): Poised for a Breakout?

I thought it a little shallow to jump on the bandwagon and try and dissect today's massacre but if you shorted biotechnology like I advised a few days ago you should be doing okay. I thought I'd look somewhere else amidst all the death and destruction and I found an unlikely bright spot: Gold Miners (GDX, $GDM).
Gold Miners have appeared to be in a bullish declining wedge and have found support early, but what I really like about the current chart is the way the EMA(13) has been getting closer and closer to the EMA(34). It has the look and feel at the moment of something that will break up. The Stochastics (14,7) are still bullishly aligned having crossed over a week or so earlier and momentum has been steadily and consistently building up with the longer term MACD (13,34) imminently about to break above zero.

Please remember this is only a breakout of a smaller bullish declining wedge; we still have a larger declining wedge to contend with after this so an upper limit at around 410 on $GDM (which also happens to be the 50% fibonacci retracement level) is set.