GDX/NUGT DAILY UPDATE

I'm not at all convinced that naming a price pattern is important, but knowing what a price pattern is in advance can be useful as far as expectations, the health of the pattern (if you know what the standards are) and even targets.

There are a couple of "possibilities" for GDX, this doesn't mean any of them are correct. One mistake technical traders make is to memorize the rules (or even worse, not memorize the rules), but fail to understand why the rules create the pattern. Almost every price pattern that is legitimate, has a psychological reason it formed, that's why they have formed for well over a century and are similar every time, human nature doesn't change and the two main drivers of price action are not supply and demand, but rather the psychological  human elements of emotion, specifically fear and greed and that's why these price patterns are so similar whether formed on a 5 minute chart in 1920 or a 5-day chart in 2000.

Here are a couple of possibilities...

 There's an inverse H&S bottom, the sloping neckline is not a problem, although it's generally not one of the cherry picked examples you'll see in a T.A. book.

The symmetrical nature of the left side of the head and right side of the head are actually quite common, even allowing quite a bit of room for fudging on the left side of the head, we still get at least two major shoulders and the right side is stuck at 1.

As mentioned yesterday, volume is key to identifying a H&S top, it's even more important in a H&S bottom.

This custom cumulative volume indicator (blue) just makes it easier to follow the trends of volume. No matter what the pattern is or isn't, the increased volume on the downside move is indicative of a selling climax event which allows a new trend to emerge, like a stage 1 base.

As far as the Inverse H&S bottom, the left side of the head volume is not critical, but by the head and to the right of it, it is very critical. Volume increasing on the move down at #2 is good, but it should be heavier at the bottom of the head and then even heavier on the advance from the bottom of the head to the neckline which it isn't.  At #5 the diminishing volume is okay, but the volume would need to pick up SUBSTANTIALLY on any advance off the lows on the right side.

This is not a great candidate for an Inverse H&S bottom.

As far as a Cup and Handle Bottom, typically a C&H is a continuation pattern with a preceding uptrend, we don't really have that here. The C&H can be a base pattern although less popular as one. We do have the cup, there are at least two different areas we could consider the cup and the downward sloping consolidation would be the handle. Volume isn't bad for such a pattern, the shape and size aren't bad, the handle is a little close to going too far, but still not bad.

If I had to put a name to it, I think I'd go with the C&H.

As far as the main issue I've had with GDX and the 3x long version, NUGT, it has been the repair of the 10 and 15 min charts, especially the 10 min.

I'm not going to go through all the timeframes today as they aren't that important, the 10 min chart update is exceptionally important.

THIS IS ANOTHER HALF SIZE POSITION I'D LIKE TO FILL OUT TO FULL SIZE AND I THINK WE ARE RIGHT IN THE AREA.

 GDX 10 MIN POSITIVE with a reversal process.

NUGT 10 min confirmation with a reversal process.

And finally, all 3, DUST 10 min negative with a reversal process providing all 3 assets giving confirmation.

I'd like to add to this position as well. The 30 and 60 min charts are pretty much already there, it was the 10 min that was troublesome. We do need the 15 min charts to migrate from the 10 min and just make some minor adjustments and a few intraday timeframes. I'm thinking we likely get the inverted "Igloo with chimney" head fake move as part of the reversal process, I will set alerts for a move below the recent rounding lows in GDX and NUGT as there's about an 80% chance that's where we find our add-to points, otherwise I'm holding the partial position that's already open and I'd have no problem opening a partial position here as long as my risk management allowed for enough room for a head fake move to add to the rest without violating position size.

This is one that told us what to expect back in April and has come to us, doing everything we expected, this is the kind of trade I don't ignore.