If you think gold’s performance has been disappointing, look at gold miners.That’ll cheer you up (assuming you don’t own gold mining stocks).

The Market Vectors Gold Miners ETF (GDX) tumbled over 50% since its September 2012 all-time high. Is there enough ‘blood in the streets’ to buy GDX?

My March 6 comparison between gold and GDX mercilessly ousted fundamental profit making flaws of the gold mining sector. Today's article will look at the technical picture. Could the steep decline be a buying opportunity?

After a 50% haircut, trend following technicals are obviously pointing lower and fishing for a bottom here is like catching the proverbial falling knife.

However, based on RSI, the selling intensity is subsiding and GDX has reached the bottom of a trend channel that contained the last leg lower. This could halt or stop the bleeding.

Where the final low will be remains to be seen, but going long with a stop-loss just beneath channel support or after GDX drops below channel support and closes back above would be a low-risk opportunity for aggressive investors looking for a favorable risk/reward trade.

Low-risk doesn't mean no risk. There is risk, but it's well defined by the trend channel.

Longer-term, the GDX meltdown provides fertile soil for a buying opportunity. But conservative investors should wait for the ‘seed to sprout’ before buying.

A break above resistance would be the first signal that the green shoot is ready to mature further. GDX resistance is provided by the red lines and black parallel channel.

A move above the trend channel will be more meaningful, but even breaking above red line resistance can be used as a buy trigger with a stop-loss just below the trend line (or parallel channel). 

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