Wednesday, December 17, 2014

For gold investors, every day of pleasure seems to beget five days of pain. Yesterday was no exception, even if it combined both in the space of a few hours. When the dust settled, it was pain that had won the day with a $36 reversal to the downside. Nasty and brutish as the selloff was, it left the bullish impulsiveness of December 1's upthrust intact, if somewhat shakier. Traders looking to get aboard for a possible next rally should attempt to do so at the 1182.25 target shown, but be aware that more slippage to at least 1164.20 would become likely if the midpoint support is  exceeded by more than a few ticks.

Tuesday's tedious histrionics missed my targeted low at 1955.00, but this Hidden Pivot support/resistance should still be used as a place to bottom-fish. Don't expect it to work as precisely as our targets usually do, however, since these proprietary swing points tend to become a little vague after they've been 'used' once. Think of it as a 'logical' place for a price reversal to occur, and therefore an opportune spot for initiating a trade. The 'camouflage' entry technique will work best here, especially since relatively few other traders know the support exists. Additional caution is warranted because the scheduled release of FOMC minutes could send the futures fleetingly outside of our allotted bands. My hunch is that 'everyone' has placed a bet on volatility, and that as a result, the stock market will be relatively subdued. If you're planning on 'jackpotting' here, my recommendation is to leg into a strangle, selling puts/calls at swing highs/lows that align with clear Hidden Pivot targets. My initial guidance on this references the 1947.25 target shown, but this Hidden Pivot may prove more useful for night owls than for those who will be trading the regular session.