If inflation continues to be a problem, the price of gold should move higher. And if it does, shares of the VanEck Gold Miners ETF (NYSE: NYSE:GDX) could skyrocket.
When a stock or ETF trades at a higher price than where it had previously hit resistance, traders call it a breakout. This can be a bullish dynamic.
Resistance is a large concentration of sellers who are trying to sell their shares at, or close to, the same price. When stocks reach resistance levels, they tend to stop going higher.
As you can see on the following chart, this is what happened when GDX reached $39.75 last May. Now GDX is trading above this important level; The resistance has broken.
This means the sellers who created it have finished or canceled their orders. With this supply off of the market, buyers will be forced to pay higher prices to bring sellers back off the sidelines.
This forces shares into a new uptrend and that could be the case here.
To learn more about trading, check out the new Benzinga Trading School.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Read at Benzinga