It is seldom a good sign when a trading vehicle triggers a 'mechanical' buy and then fails to reach the first profit-taking level. That is what has happened here, starting with the May 28 dip to the green line (x=4414.70). The subsequent bounce over the next day-and-a-half looked promising as it ascended toward the midpoint Hidden Pivot (p=4666.90), where we typically exit half of a position. Unfortunately for bulls, the rally fell about $30 short. Although we should always be prepared to implement a 'dynamic' or an impulsive trailing stop when a symbol we are trading approaches a target, in this case, the gap was too large to trigger that instinct. The subsequent relapse to below x would seem to offer an even better opportunity, but not in this case. The futures look too heavy for us to test our luck, and so we'll simply wait for the seemingly inevitable breach of the pattern's 'c' low at 4162.60. It is still possible to get long anywhere between 'c' and 'x' using a 'camo' trigger, but I recommend this only to subscribers who are familiar with the tactic. It is covered in detail in the Hidden Pivot Course I've made available free to subscribers.
If you got long at or near the green line as I advised here last week, your theoretical, unrealized profit on the standard four contracts would be around $71,000 -- more than enough to pay for your subscription and a luxurious week in your favorite destination. Typically, I advise taking off half the position at the midpoint Hidden Pivot, shown here as a red line at 4636.80. At that point, you would have a realized gain of slightly more than $50,000; plus, two contracts left, each showing an unrealized gain of about $25,000, for swing at the fences. The 5144.00 rally target we've been using for months will remain valid unless the pattern's point 'c' low is violated first. But, yes, you're right: Who cares, as long as we can continue to exploit this tired pattern for all it's worth. ______ UPDATE (Jun 1, 9:52 a.m.): Easy come, easy go. A 'dynamic stop'-loss set at 1:3 would have stopped out the trade at 4576 for a fat gain, and an 'impulsive' stop on the hourly chart would have done the job at 4512. However, I will continue to track the position as though bulls are still holding the bag, frozen with fear by this morning's gratuitous plunge. Both of these risk-management tactics are covered in the Hidden Pivot Course I've made available free to subscribers. I will switch to the August contract shortly.
Friday's dive added to the insufferable tedium that has characterized the bullish pattern shown. Its 5144 target has been a guiding feature for two months, not that that has helped much. A strong dollar has been weighing on gold and will likely get worse, according to some prognosticators. Bullion prices have endured this pressure before and are likely to do so again, but it could mean the 5144 target will be a long time in coming. In the meantime, a pullback to the green line (x=4382.40) should be regarded as a good opportunity to go bottom-fishing. The huge, 4128.40 stop-loss demands a 'camo' trigger if you are game, since the 'textbook' stop would entail entry risk in excess of $25,000 per contract. Using Hidden Pivot tactics, you should be able to reduce that by at least 95% to less than $800. ______ UPDATE (May 22): The futures spent every moment of last week vigorously screwing the pooch in a tight range above x=4382.00. There are no changes or additions to the analysis and guidance above.
The 'mechanical' buy at the red line (p=4636.30) went in the black last week with a pop to 4775 on Thursday. That would equate to a theoretical gain of around $14,000 per contract, but there is an additional $36,000 of profit potential if the futures reach the 5144.00 target. Price action at p has been wishy-washy, but that is no reason to presume that the uptrend will not reach p2=4890 at least. When it does, you should take off half of the position you hold, either in this vehicle or in an equivalent such as GLD. Be alert to the possibility of a stall or reversal at 4847.40, a truly 'hidden' resistance.
I've arbitrarily chosen to emphasize the bullish side of this chart, using a reversal pattern that projects to 5144.00. It assumes that June Gold is on a 'mechanical' buy signal that triggered last week with a dip below the red line (p=4363.30). (It missed being stopped out by 4467 by $55.) The somewhat bearish possibility starts with A=5474, the March 6 high. The corresponding midpoint Hidden Pivot support at 4244.8 would be a back-up-the-truck number for bargain-hunting bulls.
The chart leaves little doubt that June Gold will achieve the 5144.00 target, a Hidden Pivot. If it takes as much time to get there as it did to complete the A-B impulse leg, this should happen within the next ten days or so. A pullback to the green is not inconceivable; it would add more time to the ascent but would also be a gift, since the 'mechanical' buy signal it would trigger would be of the highest quality. Our main concern should be price action when the uptrend reaches 'D', since a decisive move past it would imply significantly higher prices lie ahead, starting with a test of January's all-time high at 5666.
Although the 5144.00 rally target shown remains a secure minimum upside objective, waiting for it to be achieved has been agonizing. That's because, as we know, gold's institutional sponsors could wipe out ten weeks' worth of ratcheting, tedious gains with just one of those sleazy hit-jobs to which we'd grown accustomed during the bull market's incipient stage. If the swoon comes next week, I would not recommend bottom-fishing with a 'mechanical' bid at the green line, since the trade has an elevated probability of getting stopped out. This opportunity, if it comes, will be via a 'green-line' buy only, assuming the futures get socked with a bout of weakness by those most intent on adding to their hoard at fire-sale prices. That's how the game works.
Although Gold was nearly flat for the week, a fist-pump on Wednesday precisely to the 4890.10 secondary Hidden Pivot shortened the odds of a continuation to a by-now familiar target at 5144.00. Although a pullback to the red line would trigger a 'mechanical' buy, stop 4467.50, unless you know how to craft a camo trigger, I'll recommend doing this trade only at the green line (x=4382.40), stop 4128.40, even if the futures are unlikely to fall that far to get a running start on d.
June Gold finished the week with a lackluster performance that nonetheless left intact the bullish pattern shown, with a 5144.00 target. The closing price was about midway along the length of a large range that stretched from 4580 to 4825. That seems excessive and could have pleased no one, but it was not especially bearish even though the futures finished the session with a $114 loss. Looking just ahead, a pullback to the green line (X=4382.40) would trigger an appealing 'mechanical' buy, stop 4128.00.
Five days of tedium could not push April Gold impulsively past the small but significant (i.e., 'look-to-the-left') peak at 4616.30 shown in the chart. That could change for the better with just a small leap, but until it happens there is no reason to give bulls the benefit of the doubt. However, just a little weakness could bring a test of a midpoint Hidden Support at 4282.90 that is associated with a 'D' target at 3964.70 (60-min, A=4736.30 on March 20). The higher number is where a reversal should occur if bulls are ready to take charge again following a month-long slide from 5434, but either Hidden Pivot can be bottom-fished provided you understand how. A side note: Bullion has sagged since the start of the war with Iran, but why? Turkey's behavior may hold some answers. Although it has been one of the world's most aggressive sovereign buyers of gold over the past decade, it sold or swapped about 60 tons of gold worth $8 billion in two weeks after the start of the war. Reportedly, this was to support a disinflation strategy that relies on a stable lira. ______ UPDATE for JUNE Gold (March 31, 7:07p.m. ET): The futures have stalled precisely at a 4709,70 'd' target, but a breakout would clear a path to 4890.10, and thence to 5144.00. That last Hidden Pivot should offer precisely tradeable resistance, but its decisive penetration would announce that bulls are back in force.
