Gold Bugs Index

A new rally target at 602.99 has emerged, somewhat lower than one previously identified here, and we can use it as a minimum upside projection for the near term.  The trek has hardly been easy, but the Gold Bugs index would be telegraphing a fresh burst of energy if it can close for two consecutive days above 572.62, the Hidden Pivot midpoint associated with the target.

The Gold Bugs Index has made balky progress toward a 604.70 rally target flagged here more than a week ago, but the Hidden Pivot now looks likely to achieved, and soon. That would refresh the bullish energy of the hourly chart by surpassing a daunting ‘external’ peak at 598.09 recorded on April 21, but it would take just a little more — specifically, a push above the look-to-the-left peak shown in the chart — to clinch significant new highs above early April’s 609.22.

The Gold Bugs Index looked like a good bet to fall to at least 469.69, the ‘D’ target of the corrective pattern shown, but yesterday’s upthrust was so robust, exceeding no fewer than four ‘external’ peaks on the hourly chart, that bulls could get a reprieve. If so, we should expect this vehicle to retrace a bit of the rally today and then take another leg up exceeding the labeled peak at 541.69.

There are some important structural supports near 490, but if they are breached on a closing basis, we should brace for more downside to as low as 469.94.  The 513.32 midpoint support associated with that Hidden Pivot has already been crushed, warranting a bearish bias for now.

The rally from mid-May’s lows has suspiciously failed to surpass a key peak at 559.61 recorded on the way down earlier in the month.  Now, if the minor downtrend shown in the chart exceeds its ‘d’ target, we’ll have confirmation of further weakness for at least the next 3-4 days.  The bearish scenario would of course be negated if HUI gets second wind and thrusts above 559.61.

The Gold Bugs Index created a bearish impulse leg of daily-chart degree since the last time we looked in on it, but it was answered with a bullish thrust of almost equal power.  This “duel” suggests that a lengthy period (i.e.,perhaps  3-4 weeks or more) of consolidation lies ahead, with neither bulls nor bears gaining much traction. Over the next day or two, however, the most bullish thing likely to occur would be a thrust above the external peak at 559.61 recorded May 4 on the way down.  Were that to happen, it would set up a likely test of April’s resistance peaks near 600.

It is moderately bullish that before this correction began, the Gold Bugs Index surpassed a midpoint resistance  associated with a target well above current levels, at 661.07.  That target will remain viable as long as the point ‘C’ of the pattern, 492.04, is not exceeded to the downside.  The midpoint itself lies at 576.56, and since it is now resistance, we’ll need to see HUI close above it for two consecutive days before we infer that bulls have regained the upper hand.