The August futures set up such an appealing buying opportunity for bulls Monday that several subscribers jumped on it when a timely ‘mechanical’ entry strategy was posted in the chat room. Alas, anyone who got long toward the end of the day watched the trade sink precipitously overnight, stopping out the position for a loss of around $600 per contract. As a rule, when a juicy Hidden Pivot trade set-up flops so miserably, it can pay to quickly reverse the position and do the opposite. In this case, however, going short seems no more appealing than going long, since bullion has been treating bears almost as badly as bulls.

‘Too Much Hopefulness’

My gut feeling is that the seemingly perfect ‘mechanical’ entry failed because there are still too many hopeful bulls out there. It would appear that they view each and every $20 rally as the first stage of a move to $2000, and that’s why gold has acted so leaden.  Disrupting this familiar pattern and setting the stage for a sustained rally will likely require one last, brutal shakeout. That would logically imply a dive below the key low at 1230.70 recorded almost exactly a year ago.  If and when this happens, tune to the chat room for a possible ‘counterintuitive’ entry plan.

In the meantime, I plan to ratchet up my skepticism and tune out the “Any-day-now!” bullishness of some of my guru colleagues. I’ll let the charts speak for themselves. This might have saved us some pain, since I green-lighted Monday’s trade even though gold had yet to exceed a 1274.40 benchmark flagged in my last update. For now, I will raise the bar to  1286.90. A rally over the next 2-3 days that hits that price would not likely be a fake. _______ UPDATE (July 17, 9:22 p.m.): The futures sank beneath 1230.70, hitting a low of 1226.30 without a blip. A print at 1263.10 would still trip a ‘counterintuitive’ buy signal, although not a very appealing one. As such, we should plan on using a ‘camouflage’ trigger to get long on a chart of lesser degree if the CI trade triggers._______ UPDATE (July 18, 7:21 a.m.): August Gold’s relentless weakness threatens to continue down to 1170.70 if it takes out the secondary pivot at 1219.40 shown in this chart. The pattern is a ‘reverse ABC’, or rABC as it is called in the chat room, and although I seldom use them to project swing highs and lows, in this case the pattern’s visual appeal is sufficiently compelling to warrant our attention. For gold bulls who are at or near the point of despair, notice that gold’s dive in late 2016 was even steeper than this one. My gut feeling is that bullion still needs a nasty washout to clear the air. If so, I would regard a move soon to the 1170.70 target as incipiently bullish. ______ UPDATE (July 19, 6:30 p.m.): The end-of-day spurt would become microscopically meaningful if the futures can push above 1245.80 on Friday. ______ UPDATE (July 22, 5:08 p.m.): Since the rally has come from the ‘secondary pivot’ of the pattern shown, we’ll give it the benefit of the doubt for the time being. However, in order for the upturn to start looking meaningful, buyers would need to push this cement sack above 1274.40, equal to an ‘external’ peak recorded June 25 on the way down._______UPDATE (July 25, 8:25 p.m.): A move to D=1238.00 looks like it’s in the bag, but an easy move past this Hidden Pivot resistance would imply that still-higher prices are coming.