Direxion Daily Gold Miners Index Bull 2X Shares NUGT has surged about 33% since Feb. 28, buoyed by the soaring price of spot gold, which has been setting new all-time highs consistently in recent days.
On a remarkable Friday, gold broke the $2,195 mark, propelling its relative strength index further into overbought territory. As the commodity gears up for consolidation, bullish momentum is primed to cascade into the gold mining realm, starting with major players and filtering down to smaller contenders.
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For traders eyeing the impending bull cycle in the gold mining sector, NUGT appears poised to surpass the 200-day simple moving average (SMA), potentially triggering a bullish momentum that could lead to the 50-day SMA crossing above the 200-day SMA, heralding the formation of a potent golden cross.
NUGT, a double-leveraged fund, aims to outpace the NYSE Arca Gold Miners Index by 200%. Concentrating on various gold and silver mining companies, key holdings include Newmont Corp NEM, Barrick Gold Corp GOLD, and Franco-Nevada Corp FNV, accounting for 30.05% of its portfolio.
It’s crucial to note that leveraged ETFs are tailored for seasoned traders as short-term tools rather than long-haul investments. These instruments are ill-suited for investors employing a buy-and-hold strategy or those with a low-risk tolerance.
For traders looking to capitalize on a downturn in the gold mining index, Direxion offers Direxion Daily Gold Miners Index Bear 2X Shares DUST.
The NUGT Chart: NUGT hit a low of $23.15 on Feb. 28, before embarking on an upward trajectory. By March 1, NUGT pierced the ETF’s previous lower high, signaling a reversal of its downward trend. Since then, NUGT has consistently set higher highs without retracing to establish a new low.
- For a new uptrend to be confirmed, NUGT must undergo a retracement or consolidation to form a higher low on the daily chart. This consolidation might unfold over the next few trading sessions since breaking through the 200-day SMA on the initial attempt is uncommon for a stock or ETF.
- NUGT also appeared poised to produce a doji candlestick on Friday, hinting that a potential local peak had been reached. Traders should stay alert for a probable retracement on Monday, offering a compelling entry point for bullish traders not yet in the market.
- Bearish traders may choose to hold off until signs of waning bullish momentum emerge, signaling a possible long-term decline on the horizon.
- NUGT faces resistance levels at $33 and $37.68, with support levels at $28.13 and $26.41.
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