Its not safe yet

GDX made a bullish hammer candle today, but there are still two layers of resistance to plow through before we have clear sailing. I'm using charts of HUI, the gold bugs index, as a proxy for GDX today because the resistance lines are clearer on it.

The red lines are the bearish flag that finished yesterday. HUI closed just barely under the bottom line in what could be a test of the flag before a drop. GDX closed farther below the bottom line than HUI did. Both are likely to jump that resistance in the morning, but the other resistance, represented by the nearly horizontal black line, is far more critical. A bigger view shows what it is:

The black line on the first chart is the same as the second chart. It is the bottom of the giant megaphone pattern and HUI has been testing and retesting it for over two weeks now. I don't like that it gapped under the line on Wednesday and I think that gap will now be tested. I would find it extremely ominous if HUI opened at that line and then went down for the day. It would be even worse if HUI closed below the bottom bearish flag line after testing the upper resistance. GDX and HUI nearly always track one another very well and it is good to check the HUI as well as GDX for your GDX trades. The black line on HUI is just over 474 and this corresponds to about 49.78 on GDX.
By the way, on July 30th 2008 gdx closed with a bullish hammer and the next day it gapped up to test a breakdown and then fell for almost three months. I hope that doesn't happen here.
Happy trading.