In May we wrote that Agnico Eagle was set to go higher and indeed it has done just that, making a technical breakout after some good news before getting past resistance at $42.00 and challenging its all time high.

We have covered Agnico Eagle extensively throughout this rally and we have said that we thought that a correction was due. Now the correction seems to be beginning but as we have said in previous articles, we are going to ride this one out and hold through any pullback in the stock.

Agnico Eagle is currently trading below $42.00, a level we consider as a support so it would suggest that Agnico is set to fall a little further. However, we could see Agnico Eagle bounce back to above $42.00 and then consolidate above and on this support before embarking on another rally.

The technical indicators suggest that there is a little more downside left in the stock, as the STO and RSI can fall still further and on the MACD the black line has broken down through the red, giving us a bearish signal.

We think that AEM will spend a bit more time on the decline and consolidating, ideally holding the $42.00 level. After this the stock should go on another great rally which could be signalled by the 50dma breaking up through the 200dma, so keep and eye on the moving averages.

As always we will keep our readers fully updated on the progress of this gold stock and we still have it as a BUY in our gold portfolio. Agnico Eagle trades as AEM on the NYSE and as AEM on the TSX.