By Bryan from Pitchfork Playground:
Even with the latest manipulative selling of COMEX Gold futures, price is still maintaining support within the price channel and horizontal support zone.
The latest selloff has taken Gold to the median line of the Andrews pitchfork and almost to the 100% Fibonacci extension level. We should see some support in this area even if it is short-lived.
Silver is falling lower along with Gold. Price is finding support along the median line of the regular-Schiff pitchfork but a visit to the 100% Fibonacci extension level seems like a given.
Below is the Silver daily chart for a close-up view on the Silver price. We may see some support around the level of the prior low ($14.27) but the lower median line of this Andrews pitchfork is the real price target at this point. Notice that the lower median line and the $13.92 target from the weekly chart are nearly coincident. MACD is bearish with both the MACD line and histogram falling lower Friday.
At first glance this chart of GDX is ugly as all get out. Upon closer examination, this chart gives contrarians reason to be bullish about the mining sector.
First we have a huge price gap that occurred after Gold was tanked in the overnight markets Sunday. The price gap occurred on a surge in volume almost 4.5 times the average daily volume. This is a classic exhaustion gap showing that people holding GDX have finally given up. By puking their shares into the market they have created the conditions for a lasting bottom to form.
On Friday we got another surge in volume but this time it was buyers stepping in. This volume spike was 3.7 times the daily average and it occurred on a day when the overall markets were very bearish. This massive buying spree in GDX while the markets were melting down is a very bullish indicator for the mining sector.
Friday’s action created a Piercing candlestick pattern. This occurs at the end of a downtrend when price gaps down on the open but buyers step in and push price strongly higher. The large size of the candles on Thursday and Friday increase the probability that price has now reversed direction.