It’s always nice if a trader can find a sector early in a possible bigger wave move … its doubly nice if you can get that bigger move early in a new trading year, as it is sure to make the year taste much better. Looking forward to a possible out-performer in early 2019, I can’t help but be drawn to the Gold Miner Sector. Let’s take a look at this sector’s potential for early-2019.
Gold Miner ETF (GDX) – Weekly Chart #1
Before a stock can move higher, it has to stop going lower. Pretty profound huh?? When will a stock or ETF stop going lower? …. well, when it has completed an obvious price wave structure. When I look back at the weekly chart for GDX, my eyes quickly see a completed 3-wave structure into the low right at the end of 2015/beginning of 2016.
So even if believe that the Gold Miners ETF is going to zero, because we have completed a 3-wave structure lower on the weekly chart, traders should expect at least a corrective bounce back up into the SLOT resistance zone.
Gold Miner ETF (GDX) – Weekly Chart #2
If price is actually making a change in trend, which I believe is possible in the Gold Miner sector, the move will be even bigger and longer in time than we would expect to see in just a corrective bounce into the SLOT.
Let’s look at the price action since that bigger 3-wave structure completed into the end of 2015.
Gold Miner ETF (GDX) – Weekly Chart #3
So the move out of the 2015/2016 low was quite impressive … in fact, that type of price action gives further evidence/proof that the move higher was the first leg of a multi-leg higher. Again, that move could be a corrective bounce into the SLOT or it could be the start of a new trend higher (i.e., a 3-wave price structure).
I think that the big sideways move seen over the entire 2017-2018 time frame is complete … a famous female technical analyst is famous for her saying “the wider the base, the higher into space” a stock must go!! If that saying has any merit with GDX here, then early 2019 could be great for gold miners.
Gold Miner ETF (GDX) – Weekly Chart #4
So if the move higher is just a corrective bounce, then the target for this next leg will be the 1.272x extension target which is about $37.00 or almost 100% higher than the recent close of $19.04. If the move higher is the 2nd wave of a bigger with-trend move, then price should get closer to the 1.618x extension target level, or about $48, or a move of +152%.
Gold Miner ETF (GDX) – 195 Minute Chart
Price has corrected down into the minor SLOT support level, but as you can see from the above chart, price needs to take out that a-wave low of $18.64 before we complete a nice clean ABC corrective price structure. Once that ABC is complete, we can monitor the downward broadening price structure to “officially” call the start to the next wave higher – I’ll be sure to post when that happens.
Cheers … Leaf_West