The GDX ETF needs to hold support here

 
The GDX ETF (Gold Mining ETF) is at a crucial juncture right now. For the past 7 or 8 months the GDX has built what appears to be a very large head and shoulders bottom formation.  In late January you can see from the above chart that the price on the GDX was able to break out of the pattern (above the neckline) on high volume and a sign of strength.  The breakout is represented by the first closing green bar that is above the neckline in the chart above.

Since the breakout the GDX has had a somewhat modest rally which was going against a generally very negative broad market.  Now the broad market is breaking down again and it seems the GDX mining index is unable to buck the trend this time.

Today it pulled right back to the neckline support at 31.09.  This is a critical area.  Pullbacks to support like this and especially the neckline of a large pattern like this is key.  Ideally we want to see GDX hold support here and move sideways to slightly down.

Relative Strength RSI(14) has move to a reasonable 40 level right now.

Also key to note is that volume has contracted on this pullback to the neckline.

So again, we want to see GDX hold support here as a sign that the uptrend is still intact and we can start the next leg up.  Now what we want and what actually happens is a different matter.

Let us see how it holds up in the next few days.

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