Divergence is a powerful indicator and something I’ve mentioned regularly here at Options Trading IQ. Recently we saw a text book example on GDX.

GDX had been hit really hard since July and was putting in a lower low. However, volume was less severe and RSI was not making a new low. This indicated that the strength of the decline was fading and the chances of a short-term bounce were high.

Sure enough, GDX put in a bottom at 17.28 and since rallied 6.83% in just a few days.

The rally may stall now, who knows, but this was a pretty nice bounce if you were able to catch it.