For your guidance, I am tracking a single contract whose 1701.30 cost basis has been reduced by paper profits taken on three contracts exited along the way. The suggested stop-loss at 1713.10 is cautious but justified in my opinion, since Wednesday’s rally spike was triggered by Fed news whose impact may not linger. In fact, there was no lingering effect whatsoever on stocks, which sold off moderately.  Why? The announcement that interest rates would be “held” close to zero for the next three years was about as unsurprising as anything the mountebanks and charlatans at the central bank could have ginned up in the way of a press release.

Despite the tight stop-loss, I view the latest price action in Gold as quite bullish, since the peak of yesterday’s powerful lunge created a brand new impulse leg on the intraday charts (see inset). Even so, the pullback needed to set up a second thrust could be punitive — sufficiently so to turn our theoretical gain into a loss. This I am not willing to abide, especially since we can re-enter at will any time using camouflage to keep risk tightly under control. That said, night owls can use the pattern shown to buy four more contracts. The implied risk per contract would be $350 (25% of the A-B leg) using the large pattern, so you’ll need to execute the trade camo-style at an ‘X’ entry trigger of lesser degree to keep theoretical risk below $80 or so per contract.

_______UPDATE (11:45 a.m. EST): Using the larger pattern (with a one-off A at 1703.70),  entry was signaled at 1721.20. Since I’d cautioned against using an ‘X signal with such a large stop loss, we’d have looked for our camouflage opportunity on a chart of small degree. The 3-minute chart (inset) shows how things would have played out thereof, with an entry signal at 1721.60.  Notice that all three coordinates are single-bar and that the impulse leg exceeded the required internal and external peaks.  Half the position (i.e. two contracts) would have been exited for a “successful” trade at the 1723.00 p midpoint of this small pattern, and a third for a camo “winner” at the ‘D’ target 1725.70.  This means the single new contract we still hold has an effective cost basis, reduced by theoretical profits, of 1715.10.  Averaging that over the two contracts we hold gives us an effective costs basis for each of 1708.20.  For now, use a fixed stop-loss at 1720.00 against a one-cancels-other order to exit one of those contracts at 1740.70 (i.e., 1.00 point below the ‘D’ rally target, on the 30-minute chart, of A= 1656.40 (January 25, 12:30 p.m. EST), B=1704.50 (January 26, 2:30 a.m.), and C=1703.00).

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