Dark Clouds Over The Gold Market Form A Bearish Shape
2022.04.12 14:47
Gold’s efforts misfired, silver probably faked another breakout, and gold miners aren’t doing very well either. Is there a repeat of events from a decade coming?
Yesterday’s session served as a great bearish sign, not just because of gold’s and silver’s reversals, but also because of miners’ underperformance.
Gold Daily Chart
Let’s take a look at gold.
During yesterday’s session, gold moved slightly above its previous local high, but then quickly invalidated this small breakout. Invalidations of breakouts in gold are a sell signal on their own, but the fact that we saw the same thing in silver makes the bearish nature of this development even more prominent.
Silver Daily Chart
After having been relatively calm in April, silver soared above its declining resistance line…only to disappoint shortly thereafter. The white metal still closed the day slightly above the resistance line. However, given that the reversal took place on relatively high volume, the odds are that this breakout will be invalidated shortly.
In fact, it was only yesterday when I wrote that silver was known for its fake breakouts right before starting much bigger declines. It appears that we have witnessed this kind of performance once again.
While both precious metals ended the session higher, mining stocks ended it lower. This could be a sign that the top is in. Let’s take a look at junior miners’ short-term chart.
GDXJ 240-Min Chart
While the VanEck Junior Gold Miners ETF (NYSE:GDXJ) didn’t invalidate its tiny breakout above the triangle pattern in terms of the daily closing prices, it did move back below it on an intraday basis.
So, if gold’s and silver’s reversals are followed by lower prices, junior miners will likely invalidate the breakout and trigger more selling.
Let’s keep in mind that while gold and silver are repeating their 2012 performance, we can spot some analogies in GDXJ too.
GDXJ Daily Chart
Right now, GDXJ is also after a consolidation that’s been taking place on relatively low volume and that followed a rather sizable short-term upswing.
