Wave Structure And Key Levels
Wave ((C)) is forming a five-wave impulse. From the wave ((B)) peak, wave (1) dropped to $91.13, and wave (2) is now rising. Wave (2) is correcting the move from the 10 March 2026 high and may unfold in three or seven swings. The near-term pivot is $105.74; while this level holds, rallies are treated as corrective and may fail after three or seven swings, allowing the decline to continue. Given the analysis that GDX is in a corrective downtrend, we should consider bearish derivative strategies in the coming weeks. Purchasing put options is a straightforward way to position for a decline towards the target zone of $71.60 to $84.60. Selling out-of-the-money call spreads above the key $105.74 resistance level is another viable strategy to profit if the price moves sideways or down. This technical view aligns with recent fundamental pressures on the mining sector. The latest February 2026 inflation data showed a stubborn Consumer Price Index at 3.3%, which has pushed back market expectations for imminent rate cuts. This backdrop, combined with WTI crude oil prices firming up around $82 a barrel, suggests continued margin pressure for miners. We saw a comparable dynamic in mid-2025, after gold prices stalled following a strong first quarter. During that period, GDX underperformed physical gold as uncertainty about central bank policy weighed on the broader equity markets. That historical context suggests we should remain cautious on rallies in the mining sector until there is more economic clarity.Tactical Trade Setup
The current small rally, which began after the March 10 low, presents a tactical opportunity to initiate bearish positions at more favorable levels. We should look for this upward move to stall before it reaches the $105.74 high. This bounce allows for better entry points for puts or short positions, with a clearly defined risk level. To capitalize on the expected move lower, we are looking at put options with expiry dates in May or June 2026. This timeframe should be sufficient for the next leg down, wave (3) of ((C)), to materialize. Strike prices between $90 and $80 would offer a good balance of risk and potential reward as the ETF moves towards its Fibonacci projection targets. Create your live VT Markets account and start trading now.
Start trading now – Click here to create your real VT Markets account
