GCM16 – June Gold (Last:1262.70)

The graceful lilt of the rally pattern show should comfort bulls who may have felt like they got mangled by a shredder last week. For all the tortuous chop traders may have experienced intraday, June Gold was showing encouraging signs on Friday when the dust settled. The rally on Friday put the futures on course for a move to as high as 1337.50 next week while also setting up a potential ‘mechanical’ buy on a pullback to the green line. However, to reduce risk, I would instead suggest bidding at the 1304.05 midpoint pivot once it has been exceeded by at least is $5 for three consecutive hourly bars. You could still try to get long at the green line, but because a ‘mechanical’ entry there implies initial risk of more than $900 per contract, you should attempt entry only via a ‘camouflage’ set-up on the 3-minute chart or lower. _______ UPDATE (May 9, 7:15 a.m.): Gold has gotten gratuitously sacked overnight, although the raid has yet to push the June contract beneath the point ‘C’ low of the bullish pattern noted above. That would take a print at 1270.50, $6.40 below where it is currently trading. It would require a little worse than that, specifically 1266.90, to turn the hourly chart bearishly impulsive. _______ UPDATE (9:03 p.m.): With yesterday’s plunge, June Gold has fallen as far as I could have projected using the hourly chart.  Shifting to the daily bars (see inset, a new chart), a promising trendline comes into view that has precisely supported the uptrend since mid-February. Several things could happen now relative to the trendline: 1) the futures could leap anew without pulling back to it. This would shorten the odds that a major bull market has begun; 2) they could retrace to the line, then resume their upward trek; or, 3) they could crash the support and retrace perhaps 50 to 75% of 2016’s bull move. I won’t try to predict which at the moment, but I’ll be watching charts of lesser degree to determine whether minor Hidden Pivot supports are holding, since, if they don’t, that would imply more weakness to come. At the moment, the futures have broken slightly below the ‘maxed-out’ 1262.30 target to which I alluded above. The breach so far is by just $1.30, but it tips me slightly bearish for Tuesday.  Bulls could regain command, however, at least for the near term, with a thrust exceeding 1268.30, where a minor peak was recorded on the way down Monday.