As we know, gold and gold mining stocks have been trapped in a bear market that has been severe in both price and duration.
It is seemingly a “forever” bear market as rebounds and recoveries have been followed by lower prices and more devastation. The Federal Reserve-induced strength of this week is giving bulls some hope. For the bulls, this strength needs to be duplicated in the weeks ahead or it would be another false alarm. While a new bull market is inevitable, we do not see it as imminent.
First I will start with the miners. We plot a weekly candle chart of GDXJ as it is the strongest and figures to lead the eventual recovery. GDXJ is reversing today. That is bearish though it is not entirely reflected in the weekly chart. GDXJ, trading around $21 faces a confluence of major resistance around $23 to $24.
Multiple lines of resistance and the 200-day moving average converge there. While GDXJ has formed a good base, its potential recovery will remain questionable or doubtful unless it can make a weekly close above $23 to $24 within the next few weeks. Bulls need to see GDXJ explode through that resistance or it could roll over again.
The prognosis for gold is even simpler. Its key resistance and pivot point over the past 12 months is $1155 to $1160. For the bulls, gold needs to break above that barrier with a few strong weekly closes. If it cannot, then the strength of the past few days will be another false alarm.