In this update, I will be analyzing gold miners to determine if their charts have similar activity. If they do, then most likely the same general patterns are in effect for all.

Sometimes when I have difficulty analyzing a chart for a certain company, I look at a stock chart from a different company but still within the same sector. Since a lot of the companies in the same sector tend to act in unison for the most part, looking at a different companies charts just may offer the clues you need for your original chart.

The other benefit of looking at different chart in the same sector – if all the charts do look the same then the probability of their collective outcomes is greatly increased.

Since I have anticipated lower prices for I Am Gold (IAG), one of the miners covered below, I would also think that at least one of the other two miner’s charts would confirm another pullback. If not, I may have to re-analyze IAG’s chart. So let’s see if the charts continue to be in unison like they have been for several months now.

GFI – Gold Fields

The first gold miner I will analyze was a member request several weeks back. Gold Fields (GFI) developed a Bullish Harami Cross candlestick pattern on its weekly chart (a 2 year weekly chart). This is the only one of the 3 gold miners that developed a bullish reversal candlestick on its weekly chart. The candlestick pattern did develop on buying volume that was heavier than the preceding candlestick pattern, but I would not consider the volume a final capitulation that will reverse the trend for good.

Gold Fields (GFI), Analyzing Gold Miners

A Bullish Harami Candlestick Pattern Seems to be Signaling a Trend Reversal for GFI’s Share Price

When I apply my 3 volume spike theory on GFI’s chart, the 3rd volume spike should be the week of January 23, 2017. The inauguration date for the POTUS is January 20, 2017. Coincidental?

IAG – I Am Gold

Of the 3 different gold miners I’ve analyzed in this article, IAG’s chart is the only one where it is still holding the main trendline from its uptrend. It is the only one of the 3 miners that has stayed above the 50% Retracement Line so far. It also has the most bullish looking MACD Histogram of the 3.

The blue Fibonacci Extension Tool for IAG still suggests further weakness, a push down to at least the 100% Target Line. That would complete a Double Zig-Zag wave pattern. The last area of consolidation for IAG’s share price is closer to the 161.8% Target Line though. I’ve highlighted the last area of consolidation with the gray shaded box.

But first things first. IAG’s share price appears ready for a rebound from its supporting trendline. That should push IAG’s share price back toward a range of $4 – $4.30.

This is a 2 year weekly chart for IAG.

Analyzing Patterns and Support Areas for IAG on It’s Weekly Chart

IAG’s counter-trend rally in the next 2 weeks could push as high as $4.33 before reversing and continuing its downtrend. If you are trading the stock, be certain to act quickly on any break below the supporting trendline.

SAND – Sandstorm Gold

This was another member request that I previously wrote about. This is a 2 year chart for Sandstorm Gold (SAND). Here are the items I think are important and stand out to me:

I placed a Fibonacci Retracement Tool on the previous uptrend; during the downtrend, SAND broke through the 50% Retracement Line from the black Fibonacci Extension Tool. It broke through the 50% Retracement Line on heavier than normal volume, a bearish sign.
The uptrend from $1.94 to $6.75 does not subdivide into a Bullish Impulse wave pattern that I can identify. Instead, it appears more like a Zig-Zag wave pattern. That implies that there is a good possibility that SAND will break below its previous low of $1.94 if nothing else than for a brief period.
The current downtrend can be clearly broken down into a Bearish Impulse wave pattern. Typically, when a Bearish Impulse wave pattern begins a downtrend, the downtrend is not over. Rather, the downtrend usually represents some sort of Wave A.
Before the possible break below the $1.94 area I anticipate, SAND looks ready for a counter-rally. That counter-rally should be monitored by the blue Fibonacci Retracement Tool. I expect the counter-rally may take SAND’s share price upwards towards the blue 38.2% Retracement Line before continuing in its downtrend. This counter-rally would be a Wave B of some sort in a corrective wave pattern.
SAND broke through its supporting trendline on heavier than normal volume, a bearish signal. Now that will be a resistance trendline

Sandstorm Gold (SAND), Analyzing Gold Miners

Analyzing a weekly candlestick chart for SAND using Fibonacci Retracement Tools and trendlines

The counter-trend rally looks like it could take SAND’s share price back towards the $4.80 area and possibly even up to the $5.17 area before reversing back into its downtrend.

Summary

Analyzing gold miners and their charts has led me to the following summary. If you are trading gold, be prepared for a counter-rally over the next week or so. The next Fed meeting to decide if rates are going higher is scheduled for mid-December (December 13, 2016 I think). Almost everyone is expecting a rate increase. In order for the above stocks to continue their downtrends lower, it would almost seem like the Fed would need to hold rates steady and not increase in December. That really doesn’t seem likely. But the December interest rate hike has also been expected, so maybe the increase is already factored into the share price for the miners.

Only 1 of the 3 charts shows a bullish reversal candlestick pattern. And only 1 has held its main supporting trend. All of this seems to confirm that this next uptrend is a counter-trend rally. After the counter-trend rally completes, there appears to be a good chance that gold miners will continue their downtrends until approximately the inauguration date for the new POTUS. At that time, I expect gold may be ready for an official uptrend that should last for several months while investors are feeling out the policies that the POTUS is going to try to implement in his first few months in office.

So after analyzing gold miners charts, it appears that trading them to the upside this week should be profitable. However, holding the positions much past the next interest rate decision would not be recommended based on the lack of reversal signals noted above. A little more patience may be required before going long on gold miners.