As a technical analyst, I monitor support and resistance, looking for optimum reversal levels. The gold miners are in the perfect spot for a top – are they about to turn lower? I think they are.
One of my favorite tools as a technician is to use moving average crossovers. Currently, the mining indexes are challenging a key level. This is the ideal place for a rebound high and reversal lower. See the charts below.
The HUI Mining Index
The 50-day EMA is crossing below the 200-period moving average. This is a major resistance level. A reversal lower now would recommend a breakdown back towards 145.
The XAU Mining Index
Same here, the XAU tagged the 50/200-day crossover perfectly yesterday and began to turn lower. A daily finish below 86 would support a rebound high and subsequent retest of the march 62.72 low.
-GDX DAILY- In GDX, prices struck the 200-day MA on Thursday and immediately turned lower. A close below $25.00 would recommend a rebound high and establish a secondary decline back towards $16.00.
-GDXJ DAILY- The junior mining ETF fell short of the 200-day MA and likely peaked on Wednesday. A daily finish below $30.70 would establish a swing high and likely top.
With the US surpassing China in the total number of coronavirus cases, I don’t see the markets stabilizing anytime soon. Over the next week, we will probably see end of the quarter rebalancing. That could trigger another wave of selling. Be ready for the next wave of bad news.
Above data courtesy of https://www.worldometers.info/coronavirus/
Long-term, I’m very bullish on precious metals. However, our cycles work expects a better buying opportunity for precious metals in May or June.
AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit https://goldpredict.com/