Gold Miners near a buy zone

Gold cleared a several month long consolidation a few weeks ago as it cleared $1300, and has since been consolidating as it drifts back to this breakout level. With Gold nearing potential support, the time might be ripe for a trade in the Gold miners. While $GDX is a potential trading vehicle for Gold miners, I prefer to trade the more volatile $NUGT for short term trades. While I will be focusing on $NUGT for this analysis, there is a potential that Gold and Gold miners are putting in a several year bottom, and thus a long term position is $GDX may be worth exploring.

In looking at the chart below, notice that $NUGT was consolidating for the entirety of 2017, until clearing a descending trend line in early August. While the trend line break did not lead to immediate gains, it did provide a nice trading opportunity when it cleared the small flag it formed near 33. After a more than 30% gain, $NUGT has been pulling back towards the breakout level. There are converging levels of support that may signify a reversal attempt in the near future. First, you have the horizontal support formed by the breakout level. Second, you have a rising trend line formed by recent pullbacks, and third, you have a rising 50 day SMA near that trend line. One last thing to notice is that volume has been drying up as well.

When you combine the confluence of support near $33-$34 on this chart, along with Gold pulling back to a clear support level, I believe that there will be a decent opportunity for a trade here. It’s not quite ready yet, so the key is to watch for that reversal attempt near the support levels.

 

 

Good Trading,

Joey

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