Don't Ignore This Chart!

Gold Miners Lose Price Support On Heavy Volume

 | 

The Dow Jones U.S. Gold Mining Index ($DJUSPM) held price support on its late-September swoon, but that was not the case with the recent selling.  The reason?  It's probably the reverse head & shoulders breakout on the U.S. Dollar (UUP).  A rising dollar normally sends gold prices (and gold miners) lower.  Check out these recent technical developments:

I'd be very careful with gold ($GOLD) and gold mining stocks unless, or until, neckline support on UUP is lost in the 24.40-24.50 area.  This reverse head & shoulders pattern is a bottoming formation for the dollar and Thursday's breakout action confirms it.  If the dollar continues to rise - as the reverse head & shoulders pattern breakout would suggest - I'd look for further weakness in gold miners.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
Subscribe to Don't Ignore This Chart! to be notified whenever a new post is added to this blog!
comments powered by Disqus