GDX finds buyers at key support level
VanEck Vectors Gold Miners ETF (GDX) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
GDX finished the week 1.36% higher at 28.31 after edging lower $0.01 (-0.04%) today on low volume ahead of tomorrow's Presidents' Day market holiday. Trading $0.13 higher after the open, the market was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (GDX as at Feb 14, 2020):
Friday's trading range has been $0.28 (0.99%), that's far below the last trading month's daily average range of $0.52. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for GDX. Prices continued to consolidate within a tight trading range between 28.02 and 28.59 where it has been caught now for the whole last trading week.
One bearish candlestick pattern matches today's price action, the Bearish Spinning Top.
After trading down to 28.19 earlier during the day, the ETF bounced off the key technical support level at 28.20 (S1). The failure to close below the support might increase that levels importance as support going forward. When prices bounced off a significant support level the last time on February 6th, GDX actually lost -1.65% on the following trading day. After having been unable to move lower than 28.21 in the previous session, GDX ETF found buyers again around the same price level today at 28.19.
GDX shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Buying could accelerate should prices move above the nearby swing high at 28.59 where further buy stops might get triggered. Selling could speed up should prices move below the close-by swing low at 27.92 where further sell stops might get activated. With prices trading close to this year's low at 27.68, downside momentum could accelerate should the market break out to new lows for the year. As prices are trading close to February's high at 28.90, upside momentum might speed up should the ETF mark new highs for the month. As prices are trading close to February's low at 27.77, downside momentum could accelerate should GDX ETF mark new lows for the month.
Among the six market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Support S1" stand out. Its common bullish interpretation has been confirmed for GDX ETF. Out of 406 times, GDX closed higher 53.69% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 51.48% with an average market move of 0.13%.