Junior Gold Miner ETF

GDXJ will need to surpass the two Himalayan peaks shown in the chart to cruise into thin air. The first lies at 51.92, the second at 55.79.  What are the odds? I'm not treating such a rally as a foregone conclusion, and that's why I've drawn a cautiously bullish 'trading pattern' toward the right-hand edge of the chart. It comes from a larger reverse pattern that has triggered theoretical short numerous times, each aborted at or near the midpoint support. We could use the one at 43.65 to bottom-fish if the opportunity arises, but it will need to be adjusted upward if this symbol goes above the so-far high at 50.36.

I've put aside Hidden Pivots to consider the simple picture afforded by connecting up the last two important highs on GDXJ's daily chart.  They yield a rally projection to 51.19 as the week begins, but you should factor an additional 0.05 per day (or 0.25 per week) to account for the trendline's rising slope.  That would imply resistance at around 51.44 come Friday. Achieving this height should pose no problem, since gold itself is in a strong uptrend with a target about 7% above current levels. If a commensurate rally were to occur in this vehicle, it would imply upside to 52.40.  Can GDXJ catch up with physical? It is bound to happen eventually, presumably when speculative juices are flowing more copiously.

After lightly kissing the 49.02 midpoint resistance of a conventional ABCD pattern projecting to as high as 72.23, GDXJ has lapsed into a retrenchment that threatens to become a prolonged affair before the uptrend can resume in earnest. Such a correction would trigger a 'mechanical' buy signal at the green line. However, with the A-B impulse leg more than four years distant, the likelihood of quick gratification would be slim. My gut feeling is that GDXJ will be 'just a trade' for the foreseeable future, albeit within the context of a bull market designed to test the patience of even the most ardent bulls.

Gold futures and this ETF proxy for mining exploration companies have stalled synchronously at Hidden Pivot midpoints tied to significantly loftier targets -- the latter to as high as 72.23, a 53% move from here. There is no judging yet whether such a leap is imminent; that will require a decisive push past red-line (p) resistance.  For now, though, we shouldn't assume anything, since the red line has yet to be breached in either vehicle. Please note that GDXJ would become a bankable 'mechanical' buy if it were to return to the green line (x=37.41), as well it might.

Mr Slammy hauled out his sledgehammer and knocked GDXJ for a loop midweek, but by Friday buyers were back in force, threatening to turn the 49.02 midpoint Hidden Pivot resistance into chop suey. It had stopped a strong rally cold a week earlier, but the next time, which appears imminent, bulls seem likely to triumph.  A decisive breach of the red line would put this symbol on track for an easy shot at p2=60.62. That number can be used as a minimum upside projection once GDXJ has traded for two consecutive days above p.

Bulls finished the week comfortably above an external peak at 46.32 recorded July 31 on the way down. This left GDXJ in good shape to achieve the 48.45 Hidden Pivot target shown in the chart.  The pattern is the biggest reverse abcd I have at my disposal for projecting a high, although not necessarily a top. The target should be regarded as a minimum upside projection when the new week begins. The decisive penetration of p makes this a high-probability bet.

Unlike silver futures, GDXJ has a little farther to go to complete the corrective pattern from the 49.11 high recorded on July 16. An overshoot would raise the possibility of a further correction into the range 40-41, where some important lows were recorded over the last three months. We'll be on edge if this scenario should come to pass, since a breach of the lows would portend additional slippage to around 36, or even to 32. _______ UPDATE (Aug 6, 10:35 a.m.): The week opened with a plunge down to 40.26, squarely within the predicted range. However, the breach of d=42.78 on the way down suggests that more weakness and a test of the low lies ahead.  It would take a thrust exceeding July 31's external peak at 46.32 to put bulls back in charge.

Ordinarily, the failure of a downtrend to achieve a 'D' target should be read as a sign of incipient strength. In this case, however, the gap-down opening after GDXJ head-faked above p=45.95 implies that the target remains likely to be reached, notwithstanding the robust bouncce that has occurred so far. The midpoint Hidden Pivot is a speculative place to try aa 'mechanical' short in any event, so be ready to buy puts there if overly enthusiastic buyers goose this vehicle in the early going after Monday.

Friday's decisive breach of the 45.95 midpoint support of the reverse pattern shown implies the correction is likely to hit d=42.78 before it ends. GDXJ did run back up to p at the close, but the fact that it still settled below this Hidden Pivot can only be read as a negative. A retracement rally to x=47.53 would generate a textbook mechanical short, so don't pass up the opportunity if it materializes. The 'd' target can be bottom-fished if and when GDXJ gets there, but the obviousness of the pattern, even though it's a reverse, will work against a precise turn.