One step up, two steps back: that’s how gold has cruelly “played” bulls since peaking near $1900 in 2011. One of these days, when the accustomed bull-trap rally seems to have lost its ability to rekindle even a faint flicker of hope in long-term investors, the bottom will be in. For now, though, we should treat each new uphtrust as a sucker’s bet, buying only at pullback targets or on minor, impulsive breakouts. An uncorrected thrust exceeding 1256.20 over the next couple of weeks would dramatically change the picture, but until such time as that happens, we should view gold’s daily ups and (mostly) downs with clinical detachment and just a dash of cynicism. In the meantime, and most immediately, permabulls who can’t shake the buying habit might try getting long using a pattern similar to the hypothetical one I’ve sketched (see inset). It has the potential to reduce theoretical entry risk to perhaps 3-5 ticks — and there’s always the chance you’ll be on board for the unexpected ride to $1400 that sustains our interest. _______ UPDATE (8:33 p.m. EST): The trading opportunity I’d alluded to was ripening at press time, so don’t tarry if you’re keen on getting aboard. _______ UPDATE (10:07 p.m. EST): Shortly before 7 p.m., February Gold tripped a buy signal at 1185.10 with a pattern similar to the one I’d drawn. Since the futures went on to achieve the 1187.70 ‘camouflage’ target, you should be out of three-fourths of a four-contract position, swinging for the fences with the contract that remains.
