The 1189.40 downside target of a pattern noted here yesterday remains valid, but a new and lesser target at 1186.00 has also come into focus (see inset). With two distinct downtrends driving gold at the moment, we might expect an easy move lower. In actuality, the southbound local in recent weeks has been as tedious and tortuous as the rallies. Trading this vehicle is for the nimble only, although price reversals have been somewhat easier to nail in the off-hours. _______ UPDATE (March 5, 1:42 p.m. EST): We noted three bearish targets during this morning’s tutorial session: 1189.40, 1186.00, 1176.30. Because gold is well into the fourth year of a bear market, all of these targets are likely to be reached. You can play the expected bounce from the Hidden Pivots identified above, but I’d suggest getting short to them in the first place. A mechanical short to the lowest of the three could be initiated on a rally to the 1199.70 midpoint support-cum-resistance shown in the new chart. Assuming the futures fall a bit lower first — to, say, 1191 (or so), a rally back up to p=1199.70 could be shorted mechanically with a stop at 1207.50. This would implicitly risk a third of what you stand to gain if the futures fall to 1176.30.
