Figure 1 is a weekly chart of the Market Vectors Gold Miners ETF (symbol:
GDX). The pink and black dots represent key pivot points or areas of support
(buying) and resistance (selling). There are two bearish signs that point
to GDX forming a market top.
Figure 1. GDX/ weekly
Bearish sign #1 is the double top.
Bearish sign #2 is the fact that prices are trading below the most recent
key pivot point or support level at 49.49 (see black up arrows). This level
is now resistance. A weekly close above this level would negate this analysis.
Of note, back in 2008 there were several reversals around key pivot points
before a close below support leading to a waterfall decline.
When we put these two signs together, it appears that GDX is making a market
top. A break below the rising trend line on the graph would be added confirmation.
If this were to develop, GDX should trade to the next support level at 41.83.
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