Gold & Gold Stocks Consolidate at Resistance
Commodities / Gold and Silver Stocks 2015 Feb 06, 2015 - 10:29 AM GMTBy: Jordan_Roy_Byrne
Gold and gold mining shares rebounded strongly from the end of December through the first three weeks of January. Over the past several weeks the sector has digested those gains while holding above rising 50-day moving averages. The sector is nearing a bit of a decision point where either a breakout could occur or further corrective activity.
Gold has snapped back after hitting trendline resistance at $1300/oz. Gold is consolidating below the trendline and around its 400-day moving average ($1277/oz) which it has not wrestled with since exactly two years ago. A confirmed break above the trendline and $1300/oz would potentially put Gold on a path to $1400/oz. There is Fibonacci resistance and weekly resistance around $1380-$1390/oz. If Gold can’t breakout then look for support around $1240/oz.
Gold Daily
The daily line chart of GDX (large gold miners) is below. GDX has consolidated below a confluence of major resistance for several weeks and has held in well. The 400-day moving average has marked each important top since 2012 while the trendline dates back almost as far. A confirmed break above the trendline would bring targets of $27.50 (21% upside) and $30.00 (25% upside) into play. A break above an RSI of 70 would signal sustained positive momentum and offer strong confirmation of the breakout. GDX has strong support at $20.50.
GDX Daily
Gold and gold miners in particular have digested recent gains in bullish fashion and could be positioning for the next move higher. The miners turned up in December ahead of the metals and led the rebound. In recent days the miners have inched higher while Gold and Silver have remained flat. That leadership could be another positive leading indicator. At the same time, failure to breakout immediately isn’t necessarily bearish. Further consolidation while maintaining support puts the market in better position for a sustainable breakout. Given the significance of the 400-day moving averages, the next breakout could mark the start of a bull market in earnest.
Good Luck!
Bio: Jordan Roy-Byrne, CMT is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2014 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premium, a publication which emphaszies market timing and stock selection for the sophisticated investor. Jordan's work has been featured in CNBC, Barrons, Financial Times Alphaville, and his editorials are regularly published in 321gold, Gold-Eagle, FinancialSense, GoldSeek, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world.
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