The Miners Caught a Bid Today: Did You See it Coming?

• Posted by Greg Harmon
• on January 18th, 2011

Looking at some charts of Mining stocks this weekend I made two quick comments on StockTwits and twitter.

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The first was that that Barrick Gold, (Ticker:ABX) printed a bullish hammer candle in a down move. This indicates a reversal may be about to happen. The second was that the charts overall for the mining sector looked horrible, Especially the chart of Goldcorp (Ticker: GG). All were in a downtrend. So which would it be, more downside or a reversal?

Today, they all found support and bounced. A Look at the daily and weekly charts of the Market Vectors Gold Miners (Ticker: GDX) would have had a technical analyst prepared for this. Here is the daily chart with the last candle showing the bounce today.

There are five signals on this chart that would have caused a technical analyst to prepare for a bounce in the sector. First, the price Friday touched and found support at the downward green trend line. Next the Relative Strength Index (RSI) touched the 30 technically oversold level for the first time. Third the price touched and found support at a 38.2% retracement of the up move from July through December. Next the Price settled outside of the lower Bollinger band. And finally, the price bounced off of the Fibonacci arc. If that was not enough a look at the weekly chart below shows that the price finished at the 2 year uptrend support line and with an RSI near 50.

Did you see it coming?

(As always you can see details of individual charts and more on my twitter feed and on chartly.)

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