Bulls got sandbagged yesterday on the way to our 1653.30 target, but they’ll be back. We should ratchet up our wariness just a tad, though, since the peak of yesterday’s bull trap fell just shy of the external peak at 1649.30 that I’ve highlighted in the chart. It is not this structural resistance alone that constrained buyers, but also the ton of supply deposited in a sideways scuddle that stretched from mid-March to early May.
Traders who use camouflage will have to make do with the ersatz ‘external’ peaks generated off yesterday’s low, since all of them are technically ‘internal’ in relation to the rally since. As of around 7 p.m. EDT, the five-minute chart was promising a modest opportunity via two peaks, respectively at 1624.40 and 1625.70, that could yield an impulsive pattern without the unwanted enticement of a breakout. _______ UPDATE (11:36 a.m. EDT): With this morning’s fright-mask selling — induced, it would seem, by a global dive back into risk on news of Chinese easing — August Gold has retraced half its recent gains. The initial rally was moderately impulsive, having surpassed two internalish-external peaks (although no true externals). However, the immediate picture is of ‘dueling’ impulse legs — a duel in which bears would seem to hold at least a small edge, since the impulse leg they created on December 29 took out a key low at 1537.00. My expectation is for a sloppy, choppy market in the weeks ahead, with a worst-case possibility of a test of last July’s 1491.00 low.