![\"\"](\"https:\/\/thedailygold.com\/wp-content\/uploads\/2020\/04\/Image_Gold-Gold-Stocks-Reach-Multi-Year-Resistance01_opt2-1024x768.jpg\")
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The precious metals sector has reached an interesting juncture. After a rip-roaring recovery, Gold and the largest and most important gold mining stocks ETF, GDX have hit multi-year resistance. <\/p>\n
Gold was able to surpass its pre-Corona peak at $1700 and trade as high as $1789 before selling off. From 2011 to 2012, Gold peaked three different times at $1800 before plunging to $1200. <\/p>\n
GDX is in a far more interesting position. It was able to recoup 100% of the Corona crash, but it is right back at multi-year resistance. <\/p>\n
We plot the daily bar charts below.<\/p>\n
GDX (top) has retreated from 7-year resistance while Gold (bottom) has retreated from 8-year resistance. <\/p>\n<\/p>\n
![\"\"\/](\"https:\/\/lh4.googleusercontent.com\/3vWNxPkBvh1E6wr1C28rpuGVtAvjKyoBtj-vmTZjSJIhHTBuG6eX-_nhJeFJUXzl3M3bMQOHSQXThWYFyanruQFs4tH3kmagJAF23MJopMK9hybOZl7OiBrbtytudpCO8Gt-kPl00oJwbM9w8A\")
Let\u2019s focus on GDX because the next breakout there should be more significant for the entire sector. <\/p>\n
The rebound in gold stocks has been historic, but there are a few precedents (2001, 2008, 2016). As far as the price action before and during the rebound, 2008 is the best comparison.<\/p>\n
We plot a daily candle chart of GDX, which highlights its trading during the financial crisis. Pay special attention to the price action following confirmation of the low in late November 2008. <\/p>\n
The rally that followed the November 2008 low found initial resistance at the 50-day moving average. <\/p>\n
GDX, of course, surged higher. Note that its next correction bottomed at a rising 50-day moving average.<\/p>\n
![\"\"\/](\"https:\/\/lh3.googleusercontent.com\/CazqkznPgIRKdYzguBQnW6L1igFvtGdg3Eon_uVslkuTBNb5IGpbVXkURVhBK3YejuFG1DWAhgv7dPNWdpdV7EFanr8dVEOTY9vOiKpQ50WeACAAjxjBKJQbOyaNVIGHFgbBwOK_J5NBJA0qEQ\")
At present, GDX has already corrected at the 50-day moving average and surged past it. The comparison to 2008 suggests the next move could be a retest of the 50-day moving average (as support).<\/p>\n
There is gap support at $26.70 to $27.00, while the 50-day moving average is at $26.85 and rising. <\/p>\n
![\"\"\/](\"https:\/\/lh3.googleusercontent.com\/c0H31KzT0EMkqfAhDJneTuIMPtM--IO2qk9RQmHZPYx0juZrNCNmqGgq3lsnwjDuM7dj_1jPMGVy5p3LE07kQJ5lDSYBIRlBZYfEosjpRfak_nyakRVWutRFzBrrtG7yx_JspW0BWnN3hLQu1Q\")
The December 2008 correction in GDX lasted about a month until GDX rebounded from the 50-day moving average. <\/p>\n
Today, GDX faces very stiff overhead resistance at $31-$32, and a correction could last a few months.<\/p>\n
However, the sharp rebound in GDX, as well as the senior miners (Newmont, Barrick) showing incredible strength, are positive signs for the sector. It signals big-money accumulation. <\/p>\n
GDX is in position for a historic breakout, and whether it requires a few weeks or a few months of backing and filling is not important in the long run. <\/p>\n
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