We’ve Been Here Before
As we’ll see in the charts below, gold (GLD) has pushed above resistance three times in the past.
Each time, GLD reversed.
Two of those had GLD print new post, 8/6/20, lows.
The average decline was -11.3%.
During that time, miners GDX, GDXJ, took the brunt of the action.
The last GLD draw-down (6/1/21 – 8/10/21), was about -10.2%, while GDX got whacked top-to-bottom with -28.2%.
At this juncture, miner’s downside price action looks to be leveraged by about 3:1, when compared with gold.
Gold (GLD) Analysis:
The un-marked chart:
The marked chart has the past three up-thrusts above resistance (magenta arrows) and our current potential; the orange arrow.
Note the typical distance price action traveled above the blue line resistance levels.
If GLD does not move any higher from this point, its current distance above resistance is typical when using the past three moves for reference.
In the markets, anything can happen.
Price action in GLD and miners, GDX, GDXJ are each at their own danger points.
Counter-intuitively, this is where the risk of being wrong is least (not advice, not a recommendation).
Senior Miners, GDX:
Taking the hourly chart of GDX and inverting it, gives us a chart similar to inverse fund DUST but without the tracking (bias) errors.
The inverted hourly chart:
Net downward price action is narrowing; less and less downward progress with each thrust.
This is an indicator we may be nearing the end of the move.
Helping that assessment along, is the next chart. The circled area shows Force Index is also dissipating.
Today’s session thus far, has essentially no more thrust energy when compared to the last two sessions.
Price action in DUST, has gone a little farther (lower) than desired.
However, the analysis above tells us there’s nothing, yet, that would indicate an exit of the short position (not advice, not a recommendation).
One has to remember who’s on the other side of this trade; that is, the bull side.
The general public has been led to believe inflation is rampant. The media and various YouTube personalities have whipped them into an inflation frenzy.
Its become some kind of psychosis
Costs are going higher. That part is true.
As Van Metre said about a year ago concerning the actions by the Fed (paraphrasing),
‘Do you think the Fed is going to educate the public and tell them Quantitative Easing is actually deflationary?
No, they will allow the public to have the false belief their (Fed) actions have the opposite effect.‘
Just a reminder of what the guys above are really all about; Some additional info is here.
Charts by StockCharts
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
The Danger Point®, trade mark: No. 6,505,279