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Technical analysis update – GDX and GDXJ

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Updated

GDX and GDXJ ETFs

The SPDR Gold Trust (GLD) is in a short-term uptrend, as we discussed in the last part of this series. GLD’s price movement is important for ETFs—like the VanEck Vectors Gold Miners ETF (GDX) and the VanEck Vectors Junior Gold Miners ETF (GDXJ). It’s also important for gold mining companies—like Goldcorp (GG) and Barrick Gold Corporation (ABX).

GDX consists of publicly-traded global companies. The companies are primarily involved in gold mining. The companies are of small, medium, and large capitalization stocks. It has assets worth $7.2 billion.

In contrast, GDXJ consists of small and medium companies. The companies are involved in gold and silver mining. It has assets worth $2.1 billion. So, GLD or the gold price movement directly impact GDX and GDXJ’s profitability.

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Key support and resistance

GDX and GDXJ are leveraged plays on gold prices. When gold prices rise, these ETFs should do better because of operating and financial leverage. However, that isn’t what we’ve seen. This could suggest that the rally in gold prices will be short lived.

The current momentum could push GDX to the next resistance level of $24 or even $26. However, any bearish news could retreat GDX to levels of $20 and then to $18, respectively. The Relative Strength Index, or RSI, is in overbought territory. This suggests a negative direction for GDX prices.

So, we can expect prices to rise until the overbought level. However, the Moving Average Convergence Divergence, or MACD, is above the zero line. This suggests a positive price movement. It suggests a mixed price signal for GDX prices in the short term.

In contrast, resistance for GDXJ is at $32.50. Support for GDXJ is at $24.50. The RSI is rising towards overbought territory. However, the MACD is above the zero line. It suggests a positive price movement. This suggests a mixed price signal for GDXJ prices in the short term.

For the latest updates, visit Market Realist’s Gold page.

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