AMEX GOLD BUGS INDEX

For today's chart we've chosen to take a look at the Amex Gold Bugs Index because it is bouncing off the lower support of a channel pattern. Traders will start to pay close attention to HUI because the bulls may decide to enter at current levels because of an interesting risk/reward situation. It will be interesting to see if the index will bounce off the $320 support and if it will be able to head back toward the upper resistance like it did in early March.

The recent failure to reach the upper trendline could be a concern for some bulls because it shows that traders are not as confident of a move higher as they were earlier in the year. Conservative traders may want to wait for a move above the $344 level to confirm a potential move toward $370. Bearish traders will watch for a move below the $320 level because this would be a technical signal of a move downward. More time is needed to see which one of these scenarios will be the winner.