Technical Setup - Green Light Go!GDX will likely finish this week trading near the high close to $26. The key here is the critical level for gold at $1345-$1350. This was roughly the support level after the April 2013 crash. If broken to the upside then there will be another leg higher up in gold miners. Presently the situation appears to mirror spring to summer 2012, where there was a new 52-week low established in May 2012 followed by a successful retest near that level in July 2012 and then the big move occurred. GDX went from $40.40 to a high of $55.25 for nearly a +37% move.
An equal mirror of that same situation results in GDX price of $31.35 measured from ~$22.90 which was the successful retest of the low. Since a key criteria is a higher high than the last rally top from the June 2013 bottom which happened to peter out at $31.35 in late Aug 2013, it would not be unexpected to extrapolate a new high in the $34.50-$36 range scheduled to occur by mid to late Dec 2013.
That implies a nearly +40% move from these present levels and even a laggard such as Timmins, even if it only moved in sympathy for +30% would reach $2 resistance in the short term. The action this week for it to be bumping right into low $1.60's and also holding near there bodes well for this scenario to unfold.
So how does the overall scenario likely unfold short term? I anticipate there will be a strong follow through early next week and GDX hits $27 - $27.50 range and then it might consolidate/correct and back test the low to mid $25's. At that point you will probably witness many folks bailing out of their long positions thinking the rally is over but that will be the key pivitol point from where blast off is likely to occur. These backtests after strong rallies have occurred numerous times in the past and it would be no different for it to reoccur again. GLTA.