Miners finally moved higher yesterday – did they just bottom below $34?
Head and shoulder patterns tend to be followed by verifications, during which the price moves back to the previously broken neck level of the pattern. We just saw that in GDXJ’s very short-term chart.
After a few days’ pause, the junior miners ETF moved higher, but not significantly so. It only moved back to the previously broken neckline of the H&S pattern, which is a normal thing for a market to do.
Consequently, what we saw is not really bullish – it’s a normal part of a bearish pattern. Therefore, the bearish outlook remains intact.
Stocks moved higher yesterday, and they are moving higher in today’s pre-market trading, but the rally is not that big, and everything I wrote about the self-similarity between now and the early-2022 top remains intact. The implications for the mining stocks remain bearish – and the same goes for the USD Index’s outlook. It seems that the profits on our short positions in the mining stocks are going to increase in the following days/weeks.
The situation in junior mining stocks currently offers an exceptional risk to reward opportunity in my view - I invite you to take the 10-day free trial of my Gold Trading Alerts and take advantage of it before it’s too late.
Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief