The 1623.00 correction target mentioned in today’s commentary is shown in the lower chart, but as you can see, a decisive penetration would put the April contract on course for further weakness to as low as 1588.50. We won’t pretend we have a crystal ball that can tell us how this will play out, but we’ll have a pretty good handle on how much conviction is behind the selling once we’ve seen how the futures interact with the two supports identified above.
In the upper chart, although the daily bars show gold to be in “dueling” mode, bears hold at least a small edge if we pair bullish and bearish impulse legs recorded since early November. It must also be noted that the burden of proof for the intermediate-term has been on bulls since November 18. That is when the futures created a bearish impulse leg without having exceeded to the upside a small but technically significant peak at 1818.80 that I have labeled #1.
Finally, although trading should be from the short side following a decisive breach of either 1623.00 or 1588.50, from a Hidden Pivot perspective the long-term charts do not turn bearish until such time as a downtrending impulse leg takes out the December 29 low at 1526.20 (#2) and the July 1 low at 1487.80 (#3) without an upward b-c correction.