Metals Leading Indicator Breakout Test In Play
Chris Kimble | May 24, 2018 07:16AM ET
This chart looks at the VanEck Vectors Junior Gold Miners (NYSE:GDXJ) to Gold ratio over the past 7-years. Metals bulls want to this ratio heading higher, to send a positive message to this sector.
The ratio has spent the majority of the past 7-years inside of falling channel (1), reflecting that Junior miners have been weaker than Gold.
The ratio is now testing the top of the falling channel and the top of a short-term pennant pattern at (2). The ratio attempted to break out of falling channel (1) in 2016 and 2017 with no luck. Currently, it is testing a key breakout level again at (2).
If the ratio breaks out at (2), it would send a bullish message to Miners and the metals sector overall. Will the results be different this time? If the ratio does break out, it could attract buyers that have been on the sideline for years.
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