"In light of the recent ranging action in gold, would it be correct to consider today's action in GDX and GLD to be key day reversals, and/or possible resumption of the bull trend? Always look forward to yours and Eoin's guidance on such events!"

Eoin Treacy's view Thank you for highlighting this interesting chart action. To review, an upside key day reversal is a two candle pattern, where the second candle makes a new intraday low but closes above the high of the previous day. As we say at The Chart Seminar, "the key to the key is size". The signal's predicative power is in its dramatic impact on sentiment, so the larger the dynamic of the key, the more reliable the signal. Follow through on subsequent sessions, is also required to confirm that demand is regaining the upper hand.

Neither the Market Vectors Gold Miners ETF nor the SPDR Gold Trust formed key reversals yesterday. The Market Vectors Gold Miners ETF posted an impressive upward dynamic from the region of the 200-day MA, but had not moved to a new intraday low. The SPDR Gold Trust also rallied yesterday but had a less dynamic move and had not posted a new intraday low. While key day reversals are useful signals to watch for, they are not necessary to mark important turning points.

The NYSE Arca Goldbugs Index has unwound its overbought condition relative to the 200-day MA over the last 6 weeks. It has returned to test both the upper side of the previous range, the 2008 peak and the trend mean represented by the MA. These are natural areas for it to find support. Yesterday's impressive rally helped support that view but was almost completely countermanded today. More substantive action is required to confirm a return to demand dominance.

Last November, gold, the other precious metals and many gold shares had become quite overextended relative to their 200-day MAs and we assumed a more cautious attitude towards the sector generally. Gold has now unwound most its overbought condition relative to the MA. Silver also remains in a corrective phase. However they will both need to break their short-term progressions of lower rally highs to indicate returns to demand dominance. Palladium has lost momentum somewhat but has so far held the majority of its advance. Platinum has been the sector's laggard over the last year and is currently consolidated in the region of the upper side of a yearlong range.

Against this corrective environment, I thought it might be instructive to review the constituents of the Goldbugs Index. IAMGold following a yearlong consolidation has resumed a position of leadership and has rallied impressively since December to retest the $20 area. A break of the progression of rising reaction lows, currently near $17 would be required to question medium-term upside potential.

Barrick Gold Corp pulled back in sympathy with the Index and also found at least short-term support in the region of 200-day MA yesterday. Agnico-Eagle Mining, AngloGold Ashanti, Gold Fields, Coeur d'Alene, Eldorado Gold, Cia de Minas Buenaventura Mining, New Gold and Hecla Mining all share an approximation of this pattern.

GoldCorp has been ranging with a mild upward bias since late 2009. It formed a small upside key day reversal yesterday and provided yesterday's lows hold, it will have sustained the medium-term progression of incrementally rising lows.

Yamana Gold has been largely rangebound since early 2009 and needs to hold a move above $14 to indicate a return to medium-term demand dominance. Kinross Gold Corp and Harmony Gold have relatively similar patterns.

Newmont Mining has broken its medium-term progression of higher reaction lows and while it also rallied well yesterday, it has experienced more technical deterioration than the above shares. It will need to sustain a move above $60 to confirm a return to demand dominance.

Randgold Resources is the clear laggard. It was the only one of these shares that failed to rally yesterday. It broke its medium-term uptrend in December, failed to find support near the MA or $80. While somewhat oversold in the short-term, at least a sustained move above $90 would be required to check potential for some additional downside.