GDXJ's easy thrust through 48.39, a midpoint Hidden Pivot resistance, implies a strong likelihood that the rally will reach 54.92, a bull-market target of middling importance. The pattern also suggests that a pullback to 48.39 should be bought with a stop-loss at 46.21. If you know how, you should use a 'camouflage' trigger to cut the initial risk by as much as 95%. That would entail creating an entry trigger with an ABCD pattern extrapolated from the 15-minute chart or less.
GDXJ's punitive reversal last week following a promising rally failed by two ticks to trigger a theoretical sell signal. It will likely happen in the next few days, however, sending this gold-miner ETF down to at least 48.25, the midpoint Hidden Pivot support. As always, a decisive breach of the support on first contact would imply more slippage down to as low as the pattern's 'd' target -- in this case, 43.66. That is unlikely, but we'll be better able to assess the odds once we've seen sellers interact with p.
GDXJ remains an odds-on bet to reach the 54.92 Hidden Pivot target shown. This was all but ensured when bulls gapped through the midpoint Hidden Pivot (p) at 48.39 on January 30. An additional sign of strength is that there have been no selloffs on the daily chart to enable a 'mechanical' buy at either x (the green line) or p (the red line). Only true believers would be on board at this point, since the steepness of the rally has left doubters choking on dust. The 54.92 target should be regarded as a minimum objective, since using the lower point 'A' available at 40.26 (August 5) yields an alternative projection to 57.17. The pattern has a 'secondary' Hidden Pivot at 53.34 where you should be prepared for at least slight resistance and perhaps even a tradable pullback. Long-term investors should consider covered-writes there.
GDXJ's gap opening through a daunting midpoint resistance was not quite as impressive as Comex gold's simultaneous thrust, but it was persuasive nonetheless. The rally ran out of gas on Friday, but the way buyers handled p=48.39 suggests the pullback will not get very far before they are raring to go again. The earliest the turn could come would be from 47.57, the 'd' target of a=47.88 (1/24) on the daily chart. In any case, I'll reiterate targets that are theoretically in play, for the record: p2=51.65 and D=54.92.
GDXJ launched from the red line (p=46.27) with such gusto that there can be little doubt it will reach D=48.58, probably early in the week. The move actualized a 'mechanical' buy off a low that lay well above a textbook stop-loss at 45.50. If it gains momentum, we could see a test of the 51.03 peak recorded on December 11 sometime in February. Anything above 48.58 will put a 51.65 target in play. That is the secondary Hidden Pivot tied to A=42.51 on Sep 6. The midpoint HP of the pattern lies at 48.39, so expect discernible resistance there, too.
The rally stalled last week, but we'll give it the benefit of the doubt because it yielded a theoretically profitable 'mechanical' buy on Friday after falling to within a hair of the green line. The ensuing rally barely reached p=46.27, our first profit-taking level, but it was sufficient to fulfill the rule for a partial exit. Now, if GDXJ pokes into the 'sweet spot' midway between p and p2, you can use x=45.11 a second time to bottom-fish, stop 43.95. Otherwise, we can watch from the sidelines as bulls attempt to make their way to D=48.58.
The rally could go a little higher, but it would likely be corrective. The initial downside penetration of p=45.62 in December was sufficiently decisive to imply that GDXJ will eventually fall to D=40.21. In fact, the breach was brutal enough to warrant trying a 'mechanical' short from the red line. If so, it would take a stop-loss at 47.42. That trade has already triggered and is slightly profitable, so I'll suggest enjoying it from the sidelines.
With the current focus on gold and silver futures calling for moderately bearish outcomes, I've selected a GDXJ chart that shows a potential best-case scenario. It implies that the 47.14 low that ended the week came close to fulfilling a minor d correction target at 46.69. If so, and the gold miners are close to an interim bottom, that would imply bullion prices are also about to turn higher. Regardless, GDXJ can be bottom-fished at 'd' with a reverse-pattern trigger of small degree (i.e., 'camouflage'). Alternatively, if sellers simply shred 'd', expect more downside to at least 44.75 (daily chart, A= 50.57 on 11/7). _______ UPDATE (January 5): Last week's rally failed to generate an impulse leg on the daily chart because its 44.91 apex fell 18 cents shy of surpassing the 45.o8 'external' peak recorded on December 20. This disappointing price action implies that the 40.21 'D' target is still likely to be reached.
Nothing can prevent more slippage down to at least D=40.21, the Hidden Pivot target of the pattern shown. That will amount to a 27% decline since this symbol topped near 56 in October. The target is unlikely to be usable for conventional bottom-fishing, unfortunately, since it is coincident with a low recorded back in August that is certain to attract the attention of the herd. The pattern is too obvious as well, but it is also sufficiently compelling for us to assume the bear cycle begun in October will not much exceed it. If you plan to bottom-fish, use a 'counterintuitive' trigger with an rABC pattern that comes from the 15-minute chart or lower. The point 'c' low can be planted just above the August low (40.26), equal to it, or slightly below it, since a bounce from within the midst of these levels will be unavoidable.
GDXJ is probably within no more than five points of groping its way to the bottom of the textbook head-and-shoulders pattern shown in the hourly chart (see inset). If it's going to revive sooner rather than later, though, the secondary pivot at 43.44 would be a logical place for this to occur. You can bottom-fish there with a tight stop-loss, using expiring call options if you've got the chops. I've used a dubious one-off 'A' high here, and the pattern could turn out to be governed by the marquee high at 55.58, so plan accordingly.
