Nearly everything we trade or monitor reversed sharply yesterday, although gold futures fared somewhat better.  The August contract settled at 1321.30, up $3.00 on the day, after trading as high as 1326.60 earlier.  What might this portend, technically speaking? Actually, the weak selloff could be seen as constructive, since it added an unthreatening bar to a shallow consolidation pattern that has traced out over the last three days. We were particularly bullish coming in, since an ETF vehicle that traders use to effectively go short in gold had just broken down. It symbol is GLL, and because it looks like it has quite a fall ahead of it, the implication is that gold itself is about to embark on a sustained rally.

We can only hope this doesn’t occur because geopolitical tensions have taken a turn for the worse, since the threats to world peace that already exist, such as they are, are potentially catastrophic. In any event, traders eager to ride the next upthrust in bullion should do their buying following the retracement of any small rally that has surpassed at least two prior peaks on the chart shown. I’ve sketched this hypothetically (see inset), and it is what we refer to a ‘camouflage’ trade, which is intended to reduce entry risk to a minimum. If you’re interested in how it’s done, click here for information concerning the upcoming Hidden Pivot Webinar.  _______ UPDATE (11:45 p.m.): A wicked but fleeting downdraft Tuesday night has taken this vehicle down to a so-far low of 1305.40, equating to a $16 drop. My hunch is that a second leg will follow tonight, so I’ve changed the chart to one that may be useful for night owls to bottom-fish, or for technicians to assess the likelihood of more damage.  We can usually gauge this accurately based on price action at the midpoint hidden support. In this case, however, there are so many point ‘A’ highs to choose from that we cannot be certain which matters the most until we’ve seen the ‘p’ midpoint to which it corresponds do its magic.  Looking on the bright side, even at the 1302.90 bottom of this evening’s plunge, the move looked merely corrective of a larger, bullish picture on the daily chart. _______ UPDATE (June 26, 9:09 p.m. EDT): Zzzzzzzzzzzzzzzzzzzz.………