[GDXJ] : short term threat and long term opportunity

Because of the recent price action on GDXJ I decided that I needed to step back and take a look at the big picture again.  What I found was below.  First, check out where the chart paused on Friday - right at the center tine of Andrew's pitchfork.  As I have mentioned in the past center channel has historically been one of the places were falling wedges terminate and when they do it tends to be bullish because it means the herd could not wait for the chart to hit the bottom line of the channel (much less throw under) before stepping in.

However, a breakdown of center channel virtually guarantees a trip to the lower rail.  One typical way it could happen is to bounce at the mid channel line just a little and then reverse down below mid channel to finish out the wave.  The other way would be to break down the mid channel rail on 5 waves and then reverse back above it before breaking down once more as shown in red.

IFF this breaks down the mid channel, wait for it to reach the lower rail (and perhaps throw under).  IFF this happens then it is a very, very high odds setup, 95% or higher IMO once it breaks back upwards into the body of the wedge again.  In addition, I think we might be looking at something very special here.  There is no doubt that the move up into 2011 was motive.  Thus we expect a-b-c retracement.  That falling wedge could easily count as wc.  If it would break down the middle rail and then quickly throw under then I would say it is almost assured.  The reason is that this chart will have collapsed into the range of $18.  I have mentioned many times that bubbles often collapse 90% of they value before moving up.  The DJIA was an 87% collapse into 1932.  With zero time value associated with these shares, a collapse to the $18 range would be the buy and hold of a lifetime.  Anyone who was going to be selling would in fact have already sold.

In any case, the top rail breakout is now the low stress buy signal whether it happens via the red or blue paths.