The chart above shows how the bull flag failed and the subsequent drop has created a bearish flag. Note how after the gap down GDX rose back up just enough to test the channel line and then dropped.
Yesterday's chart showed the five wave rise starting at the C point and the flag afterward, but everything needs to be taken in context. I had failed to see the earlier five wave rise. What we now end up with is a five wave rise, followed by an A-B-C decline and then another five wave rise. This is the exact internal structure one would expect in a bearish flag. The bottom trend line of the bearish flag has been broken and tested, so unless GDX can quickly rise above the bottom flag line and stay there, a large decline is likely.
As always, I trade what I see happen, not what I think will happen, so if GDX heads up instead, I will wait for a bullish flag and buy.
Happy trading.
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