Key Levels To Watch In Gold And Miners - David Brady (29/11/2019)
November 29, 2019
There has been precious little movement in
metals and miners recently. We’ve been more or less going sideways, trapped in
a range. In order to avoid repetition, I’ll just go through all of the updated
charts for Gold, Silver, and the miners.
GOLD
Gold remains in its downward trend for now.
A clear break of its 20-day EMA at 1472 would be the first positive sign that
the bottom is in. A break of its prior high at 1479 would be the second signal.
A sustained breach of its yellow trend-line resistance currently at ~1500 would
be the third.
Support is at 1446-1450 followed by trend-line
support at 1435. The MACD Line looks ready to turn higher, imho.
The weekly RSI has corrected its most
extreme overbought condition since the peak in 2011 and is now back to a
neutral 50 level. This is sufficient for a rally to begin from here. The MACD
Histogram is also at its most oversold since December 2017 when Gold hit 1124.
That said, the MACD Line could turn up again, but the risk of a negatively
divergent higher high in price is clear from the chart. Critical support is at
the prior high in February at ~1350.
GDX
GDX looks poised to break its bullish flag
pattern to the upside. Resistance is at 27.15, with the prior high at 27.50 to
follow for confirmation of a break of the cycle of lower and lower highs.
Support is at 26.15, 26, and 25.60. We’ll know one way or the other soon.
The weekly chart shows the peak at ~31,
just below the peak of 31.30 back in August 2016. In retrospect, the failure to
break out to a new higher high was a sign that a reversal was imminent. Support
is at the prior low of 26. Below there is the prior high in February at 23.70.
The RSI has corrected from extreme
overbought to a neutral 50, more than sufficient for a rally to new highs. The
MACD Line doesn’t tell us much. There is a set-up for a negatively divergent
higher high. Alternatively, it could go up to 2016 highs next, suggesting a massive
rally ahead. Worst-case, it just continues lower from here. I’m biased to the
upside as things stand currently.
GDXJ
There’s a beautiful smile on the junior
Gold miners daily chart suggesting that the bottom is in. However, we still
need at least a higher high >39.40 to even consider given the all-clear to the
upside. Meanwhile, support is at 36.25, 35.85, and the low so far at 35.70.
The weekly chart also shows critical
support at 35, the peak on February 19 (purple line). The quadruple top at ~43
is key resistance to break. Everything else matches what we’re seeing on the
weekly GDX chart above.
Again, retrospection is 20-20, and the fact
that GDX tested it August 2016 high but GDXJ didn’t even come close to its peak
back then at 49.60 was another sign that a reversal was coming. Juniors
typically outperform senior mining stocks when a rally room to run higher.
GDX vs GOLD
As I’ve shared before, the fact that GDX is
outperforming Gold recently is positive for both the metal and miners. Recall
that miners lagged the move in Gold ahead of its peak on September 4. Now it is
doing the opposite.
All-in-all, my bias is to the upside to new
highs, while not ruling out one more lower low before then until some of the
resistance levels on the upside are broken.
Next week, I’ll take a look at Silver and
Silver miners. Hopefully, we’ll see some action one way or the other before
then.
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David Brady has managed money for over 25 years for major international banks and corporate multinationals both in Europe and the US, with experience in Bonds, Equities, Foreign Exchange, and Commodities |
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