GDX / NUGT / DUST Update

Yesterday I posted an update for these 3 gold miner ETFs, GDX / NUGT / DUST Update , and showed you the 10/15 min charts that were a bit bothersome as GDX has been in a range which is now on its 6th day, I don't want to trade the tight range (unless there are stellar signals), I want the swing move or better.

I think there's a pretty obvious set-up in play, in fact on certain charts you can literally see it being constructed and just from our psychological concept (the abuse of technical traders by Wall St. because of their predictability) I think this is a pretty high probability set up which also lets the trade come to us, but this is one that takes some nerves.

 Today is the 6th day in this range I mentioned yesterday in the update linked above, that alone is telling us something as a rectangle is a technical price pattern.

Traders will trade in the direction of price's move outside of the rectangle (long/short).

As I showed yesterday, there wasn't a lot of confirmation between GDX, NUGT and DUST except on 10 and 15 min charts where confirmation was near perfect and it looked like this, a negative divegrence as the rectangle continues to develop, but not a leading negative or anything really horrible, a relative negative which is the weaker form of the two divergences.

 The 15 min chart on all 3 assets confirmed the same and we even have a gap down to go with the last negative at resistance of the rectangle.

 However, I think I've made it clear I'm longer term bullish on both GDX (gold miners) and GLD (gold) and recently revised targets for GLD's base that put it right here and right now rather than a month or so off.

This 30 min GDX chart is leading positive and is just one of several reasons I'm longer term (as in swing+ to trend trade) bullish.

 Here's where confirmation isn't that great, in some intraday charts like GDX 1 min looks really good here today  as it is leading positive.

NUGT did put in a positive divegrence NEAR SUPPORT of the rectangle, but not leading like GDX and usually the leveraged versions will lead the underlying asset.

This is where it gets a bit interesting, GDX's 5 min chart (the first of the faster timeframes that I take very seriously) is showing what looks to be clear accumulation at the lows of the rectangle.

If we look at the 5 min chart of NUGT...

 We have the same accumulation at the same areas, and we also have the distribution at the top of the range which I believe is the range being created for a specific reason, technical traders will notice it, but notice how NUGT's positive signals are not quite as strong as GDX's.

For me, the obvious play here would be a bear trap with a head fake move below the triangle which is the first breakout/breakdown and the direction technical traders will trade the asset which sets up momentum for an upside reversal on a short squeeze.

If this in fact is what happens, then the trade comes to us at much better pricing and much lower risk as the stop for a long position doesn't have to be far away, shorts would likely put stops either inside the rectangle or just above the upper trendline, ala- momentum on a short squeeze.

I do like these a lot and do think they fire to the upside on a trend trade basis so it's a bit difficult to just sit by and wait, I suppose one could phase in to a position leaving room in their risk management to add to on a head fake break below support, but that has to be done before you enter the trade, not as a way to reduce your average cost to get out of a troublesome spot because the trade was full size when you knew there was a high probability of a head fake move.

The NUGT charts, the 5, 10 and 15 min charts will now be key to the entry in to GDX/NUGT long as well as a head fake move so I'd put price alerts up for a move below the lower trendline.