• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Unlocking GDX’s Short-Term Potential: How to Nail the Measured Move Strategy
Stock

Unlocking GDX’s Short-Term Potential: How to Nail the Measured Move Strategy

by September 27, 2024
by September 27, 2024 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

A few weeks back, two gold mining ETFs made it to the top 10 of the StockCharts Technical Rank (SCTR) Report, and they’re still holding strong. Given the low trading volume in these ETFs, a more tradable alternative is the VanEck Vectors Gold Miners ETF (GDX), which still has a high SCTR (pronounced “scooter”) score. As of this writing, it’s at 98.

Looking back, how did GDX perform? It helps to revisit the article, which laid out the conditions and criteria for the uptrend—namely, key levels of support and resistance, price points which would determine either a trend continuation or reversal, and the seasonality context which can inform the more fundamental (and geopolitical) forces affecting the gold trade.

Referring to the original chart while tracking the events in the days after the article dropped, here’s what happened.

CHART 1. DAILY CHART OF GDX. Everything to the right of the blue vertical line shows what occurred after the article dropped.Chart source: StockCharts.com. For educational purposes.

As anticipated, GDX bounced at the Ichimoku Cloud line and broke above the swing point at $40 (see the ZigZag line) while remaining well below the then-previous swing low. It demonstrated the classic uptrend principle of higher highs and lower lows.

Meanwhile, buying pressure started to drop, based on the Chaikin Money Flow (CMF) readings, indicating weakness in momentum and a potential pullback.

A Short-Term Trade Within a Longer-Term Investment

Nobody knows how gold or gold miners will fare in the coming months. Analyst predictions are all over the map—and given the economic, political, and global context, it’s really no surprise.

However, you can prepare for multiple scenarios. One approach traders use is to capitalize on short-term trading opportunities as they arise, taking profits along the way.

With that in mind, the August low-to-high rally and September pullback presented an ideal opportunity to trade a “measured move.”

What is a Measured Move?

Simply put, a measured move is a three-part trading pattern comprised of the following:

An initial move in one direction (like a rally)A pullbackA continuation in the original direction that mirrors the height of the first move

The goal is to forecast the height of the final move based on the initial move. Whether the outcome of a measured move trade works in your favor or not, it provides you with a clear target and two clear exits in the form of a stop loss and profit target.

Take a look at GDX’s daily chart below.

CHART 2. DAILY CHART OF GDX. You can use the percent change tool to measure and then project a given price move.Chart source: StockChartsACP. For educational purposes.

GDX’s price move from its August 5 low to its August 20 high was approximately 18.60%. I used the Percent Change tool (available in the Annotation tool in SharpCharts and StockChartsACP) to measure this change (orange percent change measurement).

According to the “measured move” principle, the next leg up starting from the bounce on September 6 would be roughly equal to this first move. So, the second percent change ruler starts at the low of September 6 and extends its height to approximate the first measurement (blue percent change measurement).

The above chart shows that the price is about 90% of the way through the measured move. The blue rectangle on the chart shows the remaining space needed to complete the full 100% move.

How to Trade GDX

The September 6 low was a good “long” entry point for holding GDX long-term. But if you wanted to play it safe, given the longer-term uncertainty in the market, you could have used the “measured move” principles to pull off a short-term trade. Another option would be to lighten your position by unloading a portion of it by setting a profit target using the measured move principles.

Closing Bell

Short-term trading is a distinct approach that not all traders will adopt. But it also presents opportunities to take profits along the way as you chase longer-term profit goals. There are multiple swing trading setups you can use to pursue a trade within a (longer-term) trade, and using measured move principles—for trend continuation and various other patterns—is one clear way to approach such a pursuit. The GDX scenario above illustrates a clear way in which you could have used this strategy.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

You Might Also Like
  • Large-Cap Growth Threatens the S&P Rally
  • Fight This Bullish Development At Your Own Risk
  • Exponential vs. Simple: This is the Moving Average We Use
  • Breaking Down the Heavy Earnings Week
Share
0
FacebookTwitterPinterestWhatsapp

previous post
Bitcoin and Ethereum: Bitcoin increasingly safe above
next post
This Week’s “Sector to Watch” and “Industry Group to Watch”

You may also like

DP Trading Room: How Bad Data From Major Indexes Leads...

December 5, 2023

Strategic Chaos or Tactical Goldmine? What QQQ’s Chart is Whispering...

June 4, 2025

Bullish AND Bearish Options Trade Ideas

January 14, 2025

Two EASY But INSANELY POWERFUL Ways to See Stocks in...

November 11, 2023

The S&P 500 Showing More Bullish Signals, Watch This Key...

January 22, 2023

How to Spot the Early Signs of a Reversal Using...

August 31, 2023

California is Going to Drop a Liquidity Bomb on The...

July 21, 2023

Sprouts Farmers Market: A Hidden Gem on the Corner of...

January 4, 2024

NVDA Wreaks Havoc on Technology Benchmark

June 19, 2024

Who will Win the Battle for the 200-day SMA?

November 4, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • How to Find Compelling Charts in Every Sector

      July 10, 2025
    • White House accuses Powell of mismanaging Federal Reserve, citing headquarters renovation

      July 10, 2025
    • Italian chocolate giant Ferrero to buy Kellogg’s Froot Loops maker

      July 10, 2025
    • OpenAI to release web browser in challenge to Google Chrome

      July 10, 2025
    • Sports executive charged with bid-rigging in Texas arena project

      July 10, 2025

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 3,631 views
    • 2

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,919 views
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,607 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,577 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,450 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,171)
    • Investing (538)
    • Stock (2,662)

    Popular Posts

    • 1

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 2

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 3

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • How to Find Compelling Charts in Every Sector

      July 10, 2025
    • White House accuses Powell of mismanaging Federal Reserve, citing headquarters...

      July 10, 2025
    • Italian chocolate giant Ferrero to buy Kellogg’s Froot Loops maker

      July 10, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,171)
    • Investing (538)
    • Stock (2,662)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    More from Mish’s Outlook 2024 —...

    December 26, 2023

    GNG TV: Goodbye Growth and Hello...

    July 28, 2023

    NVDA at a Crossroads: Decoding the...

    March 30, 2023
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here