The gold price has spent two months within a $111 range and is positioned for a major impulse one way or the other. The large bearish pattern shown on the attached chart must be taken seriously so long as the active December contract remains below 1646.40, which is the ‘C’ point of the pattern and the top of the aforementioned $111 range. But a more recent bullish pattern is notable for having impulsed above a significant external prior high, as shown by the dotted line to the left of the green ‘B’ point on the chart. We usually look for camouflage on lower timeframes, but this pattern is a classic example of it. The pattern is active and is unfolding according to plan thus far. If the futures reach the bullish ‘D’ target of 1652.80, the large bearish pattern will be cancelled and the probability will increase that the correction from last year’s all-time high has run its course. Traders choosing to short the bullish midpoint at 1619.60 should place stops no lower than 1620.30. (Posted by Doug “harry” McLagan) _______ UPDATE (12:55 p.m.): The futures approached the midpoint of 1619.60 to within twelve ticks, and the chart now features three exposed prior highs ranging from 1618.40 to 1618.90. The pivot is not “hidden” at this point and a tightly-stopped short sale would be very risky. _______ FURTHER UPDATE (2:05 p.m., August 7): Risk-takers would have been rewarded for shorting the midpoint pivot after all, as the futures reversed at 1620.00 and declined more than five dollars before heading back up to 1621.30.
