August

Gold remains a study in disappointment and tedium. We've focused on a too-obvious pattern with a bearish target at 1756.90, and even shorted it on paper at 1851.20,  but with no great expectation of the futures getting there. Nor are they likely to achieve the very bullish, 2082 target of a much larger pattern any time soon. If you'd prefer to trade this vehicle nonetheless, try bottom-fishing in the range 1787-1792 with a 'camouflage' set-up using a chart of five-minute degree or less. _______ UPDATE (Jul 1, 9:27 a.m.): The futures are in a presumably meaningless bounce from 1783.40. That's below my bottom-fishing range, which was tied to a p2 'secondary pivot' at 1788.30.  The $6 overshoot is sufficient for us to presume that the next leg down, if and when it comes., will be an even-odds bet to reach the worst-case, 1756.90 target. Ray-rah-sis-boom-bah, Gold! You go, girl!

I'd suggested paper-trading the 'mechanical' short at 1851.10 that triggered last Thursday, but the point of the exercise was to underscore my advice that any rally not be taken too seriously. This one came off a low at 1806.10 hit on Tuesday, and the trade became theoretically profitable the next day with a so-far moderate reversal. The price target is 1756.9o, a Hidden Pivot support that can serve as a worst-case objective for the next 7-10 days. _______ UPDATE (Jun 22, 9:20 p.m.): Gold's price action can be best understood if you see it as a Bill Cosby girlfriends, unwittingly drugged and in a deep stupor.

This will come as scant consolation to long-term investors who have suffered through three months of corrective pain and tedium, but the recent low failed to generate a bearish impulse leg on the weekly chart (see inset). It could still happen, but the implication of a second try would be that bears don't have the conviction to crack 1700. Whatever happens, bullion is just a trade at the moment and nothing more, with a time horizon of perhaps 2-5 days. _______ UPDATE (Jun 13, 10:13 p.m,): Here's a fresh chart with a 1773.70 downside target that is probably the best that bulls can hope for over the near term. A rally to x=1855.30 would trip an enticing 'mechanical' short, stop 1882.60, The trade is recommended for Pivoteers who are proficient with 'camouflage' triggers, since the initial risk on four contracts would be around $12,000 theoretical. ______ UPDATE (Jun 16, 10:32 p.m.): The rally tripped the 'mechanical' short noted above, but I am still recommending the trade only to subscribers proficient with 'camouflage' set-ups.

The chart implies that I am cautiously bullish, but that's a small exaggeration. The recent dip below 1800 seems to have exhausted sellers for the time being. However,  bulls, such as they are, appear to lack the energy or enthusiasm for turning things around.  For starters, they would need to surpass early May's 1917.60 peak to generate a bullish impulse leg on the daily chart. In the meantime, there's no point getting excited about gold's prospects until this happens. A relapse that breaches the 1792.00 low would have very bearish implications. Alternatively, if gold shocks with a powerful rally that blows up p=1937.20, we could justifiably take an earnest interest in the 2082.30 target, which is theoretically in play because the green line has been touched.

A seemingly modest rally target at 1858.60 is still  viable, although the August futures seem in no great hurry to get there.  The 'reverse ABC' pattern shown in the chart would trigger a long if last week's weakness continues down to x=1777.20. However, I have little enthusiasm for gold at the moment and would therefore suggest using the micro-contract if you are uncomfortable with the implied $11,000 of entry risk tied to the full-size contract. At least half the position should be exited if the futures rally from the entry price to the red line (p= 1804.40).  I rate the trade a '6.6' -- worth a try, especially if you can execute it via a much smaller rABC pattern capable of reducing initial risk by perhaps 95%. ______ UPDATE (Jul 29, 3:31 p.m.): Today's encouraging upthrust has shifted my crosshairs cautiously higher, to the 1912.50 target of this reverse pattern. That's $54 above the old target, and it would become an even-odds bet following a two-day close above 1831,30, or an intraday stab exceeding 1850.

I've switched to an rABC pattern and a less ambitious target at 1858.60 because gold's trek higher has been so laborious, if not to say tortuous.  Intraday swings have been too nasty and frequent to use a buy-and-hold approach. However, the 'mechanical' set-up shown in the inset is designed to help make it easier on you, at least for a possible short ride from x to p2 or higher, as illustrated. We'll be better able to judge the strength of the uptrend, such as it is, once we've seen buyers interact with the target. ______ UPDATE (Jul 20, 8:35 p.m. ET): No one mentioned this in the chat room, but the trade suggested above was showing a $6000 profit on four lots at today's high. Because I was too preoccupied to signal an exit when gold surged this afternoon, I'll do so now for an $1800 gain on the pullback to 1809.10.

August Gold tripped a theoretical buy signal last week when it touched the green line (1809.8). We won't rush to get long(er), but the persistence with which the future head-butted the line could be likened to a gentleman caller who rings the doorbell four or five times to announce himself. The pullbacks were shallow as well, strongly implying bulls will dominate for the next couple of weeks if not longer.  I'll suggest using p=1869.40 as a minimum upside projection for now and trading with a bullish bias, but we'll need to see a convincing punch through it before we allow ourselves to enthuse over a further push to D=1988.70. ______ UPDATE (Jul 12, 6:37 p.m. ET): The futures' pathetic struggle at the green line today reminded me that I'd resolved not to be any more bullish in my comments than is justified by the technical evidence. My earlier assertion that the so-far shallow pullback after tripping a buy signal portends a week or two of strength was overreaching. We'll continue to use 1869.40 as a target, but I'm not offering it as a done deal. In any event, the August contract would need to close for two consecutive days above x to merit a more upbeat outlook. ______ UPDATE (Jul 14, 9:44 a.m.): Gold has popped to 1831.10 this morning, high enough to break free of the green line's gravity. You can use p=1869.4o as a minimum upside target for now.

Gold's price action lately has grown too defiant of logic and even rationality to merit diligent attention. The futures got crushed for a week in mid-June, but now sellers can't even push it down to a minor 'D' correction target. Instead, the August contract rallied on Friday, presumably gratuitously, to within an inch of a level that would negate the bearish pattern. I've set an alert at 1826.50, a tick above an external peak recorded June 16 on the way down. That's where the bullish case would become, if not compelling, then at least very faintly appealing. We might also look to get short using a 'reverse ABC' set-up if the futures make it up into the range  1810-1820. My point 'a' for the trigger pattern would be 1776.30, equal to a peak recorded at 10:00 a.m . June 29 on the hourly chart. (For a bigger picture that is bearish short-term but bullish long-term, check out the current commentary, So Maybe Gold Actually Does Suck.)  ______ UPDATE (Jul 6, 5:27 p.m.): The short trade suggested worked perfectly and generated a relatively quick, easy profit of around $2600 on four lots. A few subscribers reported getting aboard, some by interpolating with other gold vehicles, and covering at the red line as suggested.

Gold's less-than fascinating struggle to hold above an important midpoint Hidden Pivot at 1775.00 and a shelf of structural support constructed back in April has entered its second week. My gut feeling is that both will give way, sending the August contract down to p2=1702.80. But even if the futures were to rally instead, a move touching the green line (x=1847.10) would trip a somewhat appealing 'mechanical' short with a stop-loss at 1920.00. We'll want to attempt bottom-fishing if and when the Auggies fall to p2=1702.80, so stay tuned to the Trading Room if you're a player. Bulls looking for a glimmer of hope should set an alert at 1826.50, just above an 'external' peak recorded June 17 on the way down. _______ UPDATE (Jun 29, 10:20 p.m.): Here's a smaller bearish pattern with an interim downside target of 1739.40. A rally to x=1783.30 would trigger a weak 'mechanical' short, meaning it should be initiated only via a 'camouflage' set-up that reduce the implied risk of nearly $6000 on four lots. ______ UPDATE (Jul 1, 6:40 p.m.): The trade worked out perfectly, producing a $6000 gain in just a couple of hours. Shorting at 1783.30 would have been low-stress, since the futures never went higher than 1783.40 (!). As for covering the short position, the opportunity to do so came quickly and easily via a $15 plunge that followed the 1783.40 peak. Here's a chart that shows how the trade evolved.