A closer look at the Gold-and-Silver-Miners consolidation

Some of our traders are peering pretty nervously to the current Gold-and-Silver-Miners moves. No surprise, since those ones have been reacting in a strikingly bearish way to the over-average rallies of the yellow and white precious metals for as many as 2 weeks. Furthermore, the Gold and Silver Miners have totally decoupled from the strong rising US stock market environment. As to the established analysts’ opinion, such decoupling should have to lead per se to rising prices in the Mining Sector as well.

Well, quite firmly I think no one engaged in the Gold and Silver Miners should worry too much at the moment. In the not too distant future, I expect once more higher highs for the Gold and Silver Miners before the 2017 uptrend comes to a severe standstill resp. goes to pieces technically, with a probability of far beyond a 60%.

Just like every market and sector – indexes, stocks etc., you name it – also the Gold and Silver Miners have got their individual rhythm = cycle, their own biorhythm. This one has to depart from the established opinion now and then, from the general expectations, the normally habitual dependencies. The consequence are divergences, be it positive or negative.

Markets have their own life! Even within the same sector they have. Silver Miners are different from the Gold Seniors, Silver Explorers again use to perform according to price and time a little different compared with the Silver Juniors etc. Keywords: Sector rotation, window dressing and very, very important… individual seasonality! As well as: Autonomous, individual = somewhat shorter/longer trend cycles sometimes lead to inanities we don’t understand completely even though they are completely normal hence natural and above all are currently effective at the Gold and Silver Miners, I think.

For all the Miners Bulls – so to speak as a little sop for the coming couple of days – I tinkered a juxtaposition comparing the 2016 uptrend with the 2017 uptrend development. I’m matching two of the three usual leaders of a Gold-and-Silver-Miners bull run one against another: The Gold Juniors vs. the Silver Miners.

Meanwhile, as to my present assessment, the 2017 Gold and Silver Miners’ uptrend is mirroring now the 2016 uptrend course in a more and more harmonic way ==> "Equal, but not the same!"

Above, you see the daily chart of the VanEck Vectors Junior Gold Miners ETF = GDXJ: Left hand the development out of the current bear market low at the beginning of 2016. Right hand, the current uptrend of the year is contrasted.

Both the 2016 and the 2017 uptrends are clearly oriented by the FIB numbers 21 and 34 in the first rally phase. For this, have an additional look right now at the SIL ETF comparison in the daily time frame below.

In 2016, the GDXJ reached an important rally high after exactly 21 days, in 2017 it took 2 more, hence 23 days to do so. After these important highs, in each case an 11 day upleg added, so in 2016 after 32 days and in 2017 exactly at the 34 Fib number, a digestin swing wave began. In 2016, the first 32 day rally phase was clearly oriented by the gradient angle of the 2*1 Angle. Cleanly and well-ordered it was.

==> The 34 day rally in 2017 was steeper than in 2016 in terms of the angle. Thereby, the attained 2017 performance is better than in 2016 in both the first approximately 21 Fib number upleg and the second 11 day upleg.

= 32 day rise in 2016 was 8.70$ + 3.37$ = 12.07$ max.

= 34 day rise in 2017 was 11.21$ + 4.43$ = 15.64$ max.

==> 2017 outperforms 2016 in the very first 34 vs 32 day rally leg. In my opinion, this is the reason why the market didn’t go a schnapps higher than in 2016 when the rally phase topped for the time being on the 41st day, most scarcely above the upper line of the 1st double arc for a short term. However, even if we compare the 34 day 2017 upleg with the 41 day upleg of 2016, the 2017 uptrend is evidently in the head. After the very first touch with the lower line of the 1st natural upmagnet at the # 34-high, the GDXJ now started a correction move/consolidation cycle.

Yet does this attract your attention too?! Actually, also in 2016, after the very first touch with the lower line of the 1st^t double arc important uptarget/upmagnet at the # 32-high a consolidation period began. In 2016, around the 1st double arc resistance magnet a Diamond developed – duration 1! Month = 22 days!! = that cannot EVER be classified as being clearly bullish or bearish. In case of Diamonds, you don’t really know what is going to come next. Does the Diamond mean a final extreme, or is it a halfway pattern just like in 2016. Diamonds are always a fifty/fifty matter. That’s why we trade them in outbreak direction.

Now in 2017 the formation started at the # 34-top has to be classified as a clearly bullish pattern since we can identify a bull flag. It’s a bull flag that utilizes the lower line of the 1st as most ruling daily resistance.

==> Since in 2016 a 22 day consolidation cycle began at # 32-high, also in 2017 exactly such a consolidation/small correction period might be pending resp. due. Effective coming Monday, the 2017 consolidation will be at its 13th! day. So, GDXJ might keep on consolidating/correcting for 7-9 more days! Perhaps being able to test the 1*1 Bull Angle in its bull flag.

In my opinion, that’s where a good long-entry is present – if really reached – because possibly the next test of the first square line (first test at the green arrow) may signify already the final low of the consolidation/correction cycle! For sure, the next pretty certain long-signal will be a first daily close above the 1st double arc because therewith rather safely a rally continuation into the lower line of the 2nd double arc would be activated. Whether the 2017 uptrend will be able to run beyond the lower line of the 2nd resestance as the 2016 uptrend did – considering today’s level of knowledge, I doubt about it!

Now, here’s the promised Global X Silver Miners ETF = SIL Juxtaposition: