Tuesday, March 2, 2010

With the dollar benefiting from perceptions that other currencies are in even worse shape, and with institutional mindset still riveted on the idea of the dollar as a "safe haven," gold has shown no great eagerness to resume the long-term bull trend.  If and when it does, however, the initial lurch should carry to 1144.50, the midpoint resistance of the pattern shown in the chart.  However, a close above it is needed to light a fire.

The 1118.50 rally target we used yesterday remains valid and may put up some resistance, but because shorts seem to be getting no relief, it's probably time to consider the larger pattern shown in the chart. It yields an 1137.25  target and an 1111.00 midpoint that has already been breached decisively. If you're looking for a potentially easy way to get long, use a pullback from just above either of the small peaks recorded on January 21-22. _______ UPDATE (9:50 a.m. EST):  The futures have opened on unsurprising strength, surpassing the January 21-22 peaklets.  This has created a bullish impulse leg on the hourly chart (A=1112.75, B=1122.75),  but because it is unbroken for 10 points, camouflage will be difficult to find for a conventional entry at a point X. (Indeed, two C/x combinations have already formed as of the moment, suggesting there are two many overly eager bulls.)

After declining sharply since early December, the Euro has begun to turn sideways.  There is strong hidden pivot support just under the 2010 low, provided by D targets at 1.3398 and 1.3387.  The first of these is from a daily pattern that has remained active for almost three weeks.  The latter is from a 90-minute pattern which will be in effect so long as 1.3581 is not revisited.  Its sibling midpoint is at 1.3484.  Below all of these levels is another hidden pivot at 1.3344.  _______ UPDATE (5:24 p.m. EST):  The Euro traded through the 1.3484 midpoint and made a new 2010 low, but it reversed above our other targets and rallied far enough to cancel the 90-minute pattern.  Pivots at 1.3398 and 1.3344 will remain in effect so long as 1.3840 is not revisited.

If stocks are now involved in a bear-market rally within a bear-market rally, we might expect the Nasdaq futures to reverse at a level no higher than the hidden pivot at 1859.50.  But if that D target is surpassed by one point or more, only a pivot at 1877.50, derived from a lower "A" point, will stand in the way of new highs for the larger bear-market rally that began almost exactly a year ago.  _______ UPDATE (5:15 p.m. EST):  We got a bounce from 1859.00 which lasted two hours but gave us limited profit potential.  Subsequently the futures surpassed the 1859.50 target by almost three points, then pulled back substantially.  The 1877.50 target remains active.

Is Gold's correction from the record highs of early December about to run out of steam? Rick sees some encouraging signs, which he discussed recently with Al Korelin.  Click here for the interview at Kitco.