For all of December Gold’s histrionics on Friday, the intraday low failed to take out any prior lows on the daily chart; it therefore didn’t even come close to creating a bearish impulse leg. Moreover, the first of the prior lows should have been a piece of cake, since it comprised a single-bar bottom anchoring a modest, three-day consolidation (see chart). This low would not likely have provided much support if it had been tested, but in the end, sellers looking down the barrel of a pea-shooter declined to shoot it out. These are all subjective considerations, but they contribute to a picture that was bullish to begin with and which has now become moreso because sellers showed such cowardice. Looking just ahead, we should note that the futures ended the week with Friday’s sharp recovery still in motion. The nearest unachieved Hidden Pivot worth noting lies at 1183.50 – the target of a minor uptrend on the three-minute chart, where A=1167.70 (Friday, 10:33 a.m. EST). Day-traders should make entry using A-B impulse legs on the lesser charts that have surpassed look-to-the-left peaks, of which there are many.
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Comex December Gold
Gold telegraphed tonight’s rally through resistance by an earlier failure to reach the ‘d’ target of its initial correction and by the shallowness of that correction. A secondary target at 1185.50 could still contain the rally, and bulls should not break out the bubbly until it is left behind in the dust. More immediately, as of 1:25 a.m. EST, the futures were just a tad shy of a minor Hidden Pivot at 1178.90, but any progress above it would put the 1185.50 pivot in immediate play. Here are two other minor pivots where we should expect a pullback that the nimble can trade: 1180.40 and 1199.20
The futures turned up tentatively after make a run at an 1155.00 downside target that was missed by $2.70. This is bullish as far as it goes, but it would take a print Monday night at 1168.90 to suggest that buyers are not terribly intimidated by the 1174.90 resistance pivot we’ve been using for so long. I’ve hung out a headline target at 1337.00 if it should get shredded, but I am not expecting this, at least not so soon after the lower pivot was achieved. Keep in mind as well that the futures could feint to 1185.50 without affecting the odds of a serious correction.
A key target at 1174.90 remains viable, but we’ll focus on a more conservative objective for now at 1155.60. That’s a Hidden Pivot, and it comes from the pattern shown in the accompanying chart. An easy move past it would activate another at 1158.20. These two numbers can be used by scalpers, but from an analytical standpoint any lack of resistance will confirm a swift finishing stroke to 1174.90.
December Gold appeared to be struggling Thursday night to seize the advantage afforded by its breach of a midpoint resistance at 1142.80. The sibling target is 1155.60, and we should therefore use that Hidden Pivot as a minimum rally objective for the near term. Alternatively, a dip below 1125.2o today — unexpected at the moment, based on the technical evidence — would turn the hourly chart bearish.
Gold was getting whacked in the wee hours and looked bound for 1136.60, or perhaps 1134.20 if any lower. You can try bottom-fishing at the lower number, stop 1133.40. If these Hidden Pivot supports fail to show any pluck, it would suggest that the weakness is likely to spill into next week. Alternatively, the futures would need to push above 1147.70 today to be in a good position to kick bear butt when the new week begins. ______ UPDATE: The overnight trade would have worked in theory, since the 80-cent stop-loss caught a rally four times that (i.e., $3.20). Gold turned sonofabitch thereafter, chopping up bulls and bears alike as it hacked its way lower, changing nothing in a bigger picture that remains bullish.
A rally target at 1174.90 is still our minimum upside objective, although it has the potential to produce an important top. Night owls looking for a way in can test the water at 1136.80, stop 1136.20, provided 1142.50 is not exceeded to the upside first. If the stop is hit and the futures go just a bit lower, exceeding 1135.40, that would turn the lesser charts decisively negative for the near term. _____ UPDATE (2:00 p.m.): My niggardly stop-loss missed the low of a terrific rally by three ticks. Meanwhile, Harry, weighing in last night in the chat room, had the right idea, since his stop at 1135.80 was protected by a prior low just above it and the round-number stubbornness of 1136.00.
The futures were working on a bullish flag Monday night, tracing out a correction that had gone as low as 1135.90 as of midnight EST. If the low holds, a pop to 1151.30 should come next, provided the 1143.60 sibling midpoint of this Hidden Pivot yields to buyers. The 1174.90 target of a much larger pattern is still my minimum objective, but a dip today touching 1123.20 would be reason to turn cautious.
There were some minor rally targets just above Friday’s highs, among which 1126.00 looks to be the most useful. This is not a number to short; rather, we should look for an unlabored move through it to confirm that the futures are still tracking a course to at least 1134.50, a Hidden Pivot that was narrowly missed last week. Above it sits another, more important, target at 1174.90 that will be the most crucial gold has faced in a long while. I do expect it to be reached, but we should monitor the hourly chart closely nonetheless, since a trend failure that falls shy of it (or shy of 1134.50, for that matter) could have bearish implications for the intermediate- to long-term. I have included a chart that shows how both targets were derived.
Gold peaked $11 shy of an important Hidden Pivot target at 1134.50 yesterday, then got clobbered by the steepest dollar rally in, oh, two weeks. While we are obliged to take the rally seriously, we have an equally serious obligation to make certain that it proves itself each and every step of the way. (See today’s DXY tout for precise benchmarks by which to judge any success thereof.) If you were trading gold futures, including against a long-term position, a trailing stop of about $4.50 should have been considered, since profit potential from the intraday high was about 2.5 times that. Looking immediately ahead, the correction pointed to a tradable low at 1098.10 (stop 1097.60); or if not there, at 1095.90 (stopped according to taste). We should infer that more selling is coming if those Hidden Pivot supports give way within 30 or so minutes of first being touched.
