I know it's been awhile since I've posted on this blog and that's primarily because I am more of a trader than blogger. If any of my readers are still with me I'd like to share a trade I see setting up in the gold market particularly the gold stocks.
Above is a weekly chart of GDXJ which is the Junior Gold Miners ETF. As you can see we have an inverted head and shoulders bottom which has just been confirmed today with a rally through the neckline. For those of you not familiar with this pattern an inverted H&S formation is a bullish setup.
What I like about this setup is that both shoulders are symmetrical in terms of distance away from the head portion of the pattern. Notice the huge increase in volume that has taken place over the past few months which in my opinion is pent up energy that is about to be released.
On a seasonal basis gold and gold stocks usually begin their seasonal rally around July/August which helps add further confirmation that this inverted H&S pattern may have validity.
If the pattern plays out I'm looking for a rally up to the 62.50 area which is quite a distance away from where we are trading now. As always there are no certainties in trading and this is not a recommendation to get long. I am simply sharing my view of the market for what it's worth. GDXJ closed today at 45.03 which is up 5.41% from yesterday's close.