On Wednesday the gold futures declined enough to produce the largest pullback of the recent strong uptrend, but we still don’t have enough of a BC leg to work with. The 26% decline from the $1790 high and the subsequent $24 rally, which is extending in the early morning hours of Thursday, raises the question whether the large impulse wave will make new highs. The alternative is a lower low and a large pattern that we can take seriously. The impulse would retrace by about a third with a decline to $1724. Yesterday’s sharp drop, which was underway when the trading pit opened at 8:20 a.m., produced a “wall” from 1763.50 on down. The recovery has thus far narrowly missed that prior high (at 1763.50), visible on the 5-minute chart. Nonetheless, most of the decline has already been retraced, which means that the powerful move has been almost neutralized in Hidden Pivot terms. If the current session high of 1762.50 holds, we should keep an eye on the targets associated with A=1768.40, namely a midpoint at 1747.60 and a ‘D’ target at 1732.40. If the uptrend continues, look for resistance at the midpoint of a larger pattern at 1773.30, as depicted on the attached chart. The pattern’s ‘D’ target at 1808.30 is not a place to sell or to sell short, as it is only slightly above the higher of two major prior highs going back to last year. (Posted by Doug “harry” McLagan)
