There it is. There’s the likely C part of the ABC correction in the miners.
Several days ago, I wrote that during this corrective upswing, the GDXJ could move to $50 or so, and one of the reasons is its previous intraday high. Quoting from my Dec. 3 2024 Gold Trading Alert:
„Still, in the very near-term, I wouldn’t exclude the possibility of seeing a quick rally based on the current momentum. The GDXJ could even move to $50 or slightly above [it] (a move above $51 seems very unlikely, though) based on the repeat of the mid-November rally, the very short-term triangle-vertex-based turning point, and the resistance provided by the early-Nov. high.”
That’s exactly what we saw today. The GDXJ moved above $50 – even touched $50.55, and then it moved back down. At the moment of writing these words (about halfway into today’s session), the GDXJ is back below $50.
The dashed line (the previous intraday high) stopped the rally on the intraday basis, and it could be the case that the rising resistance line stops the rally in terms of the closing prices.
Either way, as the possible upside target was reached, and the ABC pattern of the correction is intact, it seems that the mining stocks can decline shortly.
The USD Index is once again testing its previous highs, and since it didn’t confirm the breakout below them, this position supports another rally shortly.
Zooming in shows that while the daily reversal wasn’t followed by a rally immediately, it was the same with the late-Oct. – early-Nov. reversal. And the latter was followed by another strong upswing soon.
Consequently, I wouldn’t view the lack of rallies here as something bearish or something that invalidates the bullish case for the USDX.
Please keep in mind that the last time the USD Index rallied above 107, it then corrected significantly and then it soared much higher. This time, the rally that preceded the top wasn’t as volatile, so the correction doesn’t have to be as volatile, either.
I marked the start and the end of the previous correction with a dashed line – the USDX is currently somewhere in the middle of those levels. It seems that the current correction is simply milder.
[The analysis continues in today’s Gold Trading Alert.]
As always, I’ll keep my eyes open, and I’ll report any updates to my subscribers accordingly.
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Przemyslaw K. Radomski, CFA
Founder, Editor-in-chief