By Bryan from Pitchfork Playground:
Gold continues waffling around within its $75 price range. This week we had two successful tests of support at the $1150 level, the bottom of the range. With significant economic uncertainty in recent weeks, this lack of response in Gold is somewhat surprising.
Silver opened Sunday’s session with a spike higher but the sellers came in and pushed price back down.
Silver has been shuffling along the median line of this Andrews pitchfork for several weeks now. If we consider the 5 rules for using Andrews pitchforks, this is an example of the second rule where price consolidates above or below the median line. In this case, however, price isn’t really consolidating, it is just working its way lower while the median line provides both support and resistance.
This action in GDX could be bad news for the mining sector. The horizontal line around $17.60 has served as support since 2008 and price closed below that level this week. Given the weakness in Gold and Silver along with the fact that MACD is on a sell signal, it seems unlikely that price is going to bounce back above the $17.60 level in the coming week. There should be some minor support at the level of the 2008 lows ($16.33 and $15.83) and then the median line of the modified-Schiff pitchfork around $13.30.
After bouncing off the lower median line of this modified-Schiff pitchfork, the HUI found support several times above that low point. The gray support zone and the prior low was broken last week. The week’s candle is fairly bearish with the long upper wick showing us that sellers were able to take control and push price lower. Both the MACD histogram and MACD line are dropping, suggesting that price energy is to the downside.
This closeup of the HUI shows the 2008 low for reference. Notice that the HUI is already decisively below its 2008 low so the next support level is around 125 at the fork’s lower median line.