Gold Price at New Highs? Sellers Say No
Sunshine Profits | Dec 05, 2023 02:08PM ET
The huge rally in gold and the monstrous decline that followed provided a sign of epic proportions.h2 Powerful Bearish Combination/h2
Gold price’s huge-volume reversal is the last thing that anyone even remotely interested in the precious metals market should ignore.
Gold price was just soaring to new highs like there was no tomorrow, and then it happened. “NO” – was the sellers’ response, said with a voice that doesn’t accept any comebacks. Gold price fell so hard that they not only canceled the quick rally but even erased whatever they had gained on Friday. And some of the previous gains, too.
Invalidations of breakouts are generally immediate sell signals. The same goes for “shooting star” reversal candlesticks, which we saw yesterday. In particular, when that candlestick formation is confirmed by high volume.
Since gold reversed on enormous volume, and it invalidated its key breakout (above the previous all-time highs), we have an immensely powerful bearish combination here.
h2 The GDXJ Invalidation/h2And mining stocks?
Miners have been very weak compared to gold, except for maybe a week or so. Miners are not even close to testing their all-time highs. They were not even close to their 2023 highs, let alone their 2020 highs.
And yet, the GDXJ suffered an invalidation of its own. It moved back below the 61.8% Fibonacci retracement level based on its 2023 decline. As I already wrote above, invalidations are sell signals, so the above serves as a bearish confirmation of what we saw in gold.
If that wasn’t enough, we saw sell signals from the RSI indicator as it moved back below the 70 level in both gold and GDXJ. In the case of the latter, it happened after the RSI was in one of the most overbought conditions in years. The fact that previous such situations accompanied the most important tops is not to be ignored.
This combination of factors is extremely bearish for the short term. Since the medium-term trend in the miners has been down for many months, and together with the above, it creates a massive trading opportunity. It looks like our 11-completed-unleveraged-trade winning streak will grow further shortly.
Get The News You Want
Now, can gold still reverse its course and soar to new highs, taking the mining stocks with it? Yes, it can indeed happen. There are very specific signs that would foretell that, and we might see them any day or hour here, but they are not present at the moment of writing these words.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.