gcq10

Our minimum downside objective for the near term is still 1179.40, the Hidden Pivot midpoint of a pattern that projects as low as 1140.10.  There is a second bearish pattern that we are watching as well with an 1186.90 midpoint (already breached, albeit only slightly) and an 1155.00 'D' target. Alternatively, a print at 1226.30 is needed today or tomorrow to suggest that bulls are once again taking charge.

Considering how modest our rally target is, the futures are taking their sweet old time getting there.  We should use 1223.90 for now, based on the pattern shown in the accompanying chart.  Its sibling midpoint is 1213.20, but an intraday breach has not been sufficient to propel the futures the rest of the way. _______ UPDATE (12:17 p.m. EDT):  The futures have broken sharply lower this morning, presumably taking the path of least resistance. We now need to face the music --that the correction could continue down to as low as 1140.10 before strong hands start grabbing for bargains. (See new chart.  Here are the coordinates for the downtrend, from the 60-minute chart: A=1263.70 (June 28), B=1185.00, C=1218.80.)  The HP midpoint of this pattern is 1179.40, and so that will serve as our minimum downside objective for the near term. A close below it, however, would portend a full-blown retracement to 1140.10.  As Gold continues to fall, we should also monitor a lesser midpoint/D pairing (where A=1248.80, from June 30) of 1186.90/1155.00.  That midpoint has already been breached by $1.10, but we should stipulate a close below it before inferring the worst.

From chat room regular "Tom Paine," here's as good as summary as you will find of yesterday's price action in Gold: "It went down then up then down then up again today and is virtually unchanged on the day."  From a Hidden Pivot perspective, nothing has changed. A print at 1222.90 would be mildly encouraging but anything less should be ignored.

I called the rally unimpressive in the chat room for three reasons:  1) It derived from an ersatz (aka "sausage") A-B impulse leg;  2) it failed to achieve a 1222.90 Hidden Pivot target; and 3) it failed to exceed a minor look-to-the-left peak, also at 1222.90 (and visible only on the 15-minute chart or less).  The 1222.90 benchmark was never intended to be a major bull signal -- only a threshold that would mildly challenge buyers. We'll continue to use it as an indicator of bullish resolve nonetheless, but it should not be regarded as an all-clear signal by those who have been waiting for one.

The action of the last three days is suspect -- i.e., presumably distributive --since all of it occurred beneath some intraday peaks near 1215 recorded in early July. The futures could remedy this appearance of weakness with a thrust exceeding 1222.90 -- or better yet, a close above that number -- but failing that, an 1162.30 correction target first broached here a while back will remain in play.

Maybe today will be the day that bulls finally break through the tedium?  As noted earlier, it will require a push above 1222.90 to create a mildly promising impulse leg on the lesser charts.  Friday's upthrust indicates more upside to 1223.60 if midpoint resistance at 1215.20 can be surmounted; however, it should be noted that over the last week-and-a-half, the futures have been unable to reach even modest rally targets.

You know the drill by now: a push to at least 1222.90 is needed to suggest that bulls are doing more than merely breathing. In the meantime, the 1162.30 correction target is sill viable. Night owls can look for bull camouflage in the pattern shown. If it develops as such, affording an opportunity to get long at 'X', no more than a few ticks should be risked, and partial profits should be taken at 'p' if the position contains more than a single contract. _______ UPDATE (11:57 a.m. EDT):  The trade shown in the chart triggered, but the ensuing rally died at the Hidden Pivot midpoint.  The trade therefore would have been a small winner, or a scratch at worst, but it wasn't until the futures had noodled around for another six hours that they took off in earnest, rallying $20 from the evening/overnight lows. This took them as high today as 1214.10 -- not quite sufficient yet to celebrate.

Although the futures managed a $20 rally off yesterday's lows, they still looked unimpressive. There were two bullish impulse legs on the lesser charts when the dust had settled, but if buyers had been more enthused they would have achieved this feat with a single burst. Once again, we'll set the bar at 1222.90 to tell us when buyers have turned serious. Otherwise, the 1162.30 target flagged here earlier will remain in force.

The futures got whacked half as hard as they did last Thursday, putting in a shaky low just 80 cents above our 1188.70 target (a midpoint pivot).  Because the bounce so far has been feeble, however, we should be prepared for a further fall to at least 1162.30 if 1188.70 is breached decisively or if the futures closed beneath that number. Alternatively, and once again, buyers would need to pop the August contract above 1222.90 to put bulls back in command. ______ UPDATE (10:17 a.m. EDT):  Gold is struggling for altitude after bottoming overnight at 1185.00. That is bearish, but we'll use a close below 1188.70 as our bear trigger. In the meantime, it would only take a pop to 1198.50, just $3.10 above today's so-far recovery high, to turn the hourly chart bullish. ______ FURTHER UPDATE (1:28 p.m. EDT):  The pop above 1198.50 should be discounted, since it took several running starts to achieve. The move is impulsive on the hourly chart, but not very impressive.