August Gold has struggled for loft after bouncing from just beneath a Hidden Pivot support at 1903.90 that I'd flagged on June 29. Bullion tends to taunt us with weakness before rallying sharply (albeit fleetingly) to nowhere in particular. In this case, however, it looks like it wants to go lower in order to get better footing for a sustained uptrend. We can use the 1875.00 downside target shown for now, but we'll switch to a more bullish outlook for trading purposes if buyers can push above an external peak at 1949.00 recorded two weeks ago. _______ UPDATE (Jul 13, 10:15 a.m.): The futures tripped a 'mechanical' short when they came within a hair of x=1969.30 at 8:35. The subsequent $12 dive could have been shorted with a reverse-pattern trigger, but I am suggesting only that you paper-trade this one. If it is stopped out with a rally above the pattern's 'C' high, that would be the most bullish event we've seen in a while. Even then, we shouldn't trust the rally until it has created a series of impulse legs on the lesser charts.
August Crude's histrionics have been easily tradeable, most recently via a nasty dive on Thursday from within three cents of a rally target advertised here when fresh touts went out to you last Sunday evening. The futures rampaged to a strong close on Friday that could get legs, but more immediately they will face resistance from the 74.29 Hidden Pivot resistance shown in this chart. Pivoteers familiar with reverse-pattern (rABC) trades can try it with a trigger interval no greater than 16 cents, but be alert to a possible short squeeze that blows the target to smithereens when trading resumes this evening.
August Gold turned from nearly exactly where expected, a 1903.90 Hidden Pivot support of middling importance. The actual low occurred at 1900.60, strongly suggesting that our bid was front-run by others using the same, visually obvious pattern we employed to project a downside target. If it turns out that too many smart guys got aboard for this reason, we should expect the futures to screw 'em all by stopping out the 1900.60 low before embarking on a sustained rally. This should have a positive impact on our ability to trade this vehicle profitably, since exploiting fake-outs is our forte. In any event, an alternative target at 1875.00 will remain viable, at least in theory, until such time as 2000.70 (i.e., an alternative 'C' high) is exceeded to the upside.
The bullish pattern shown is so fetchingly gnarly that we could expect it to work a second time for a 'mechanical' buy if the futures revisit the green line (x=69.78). Another feature of the pattern is that it looks likely to reach the D target at 72.31, notwithstanding that the initial upside penetration of the midpoint Hidden Pivot was feeble. A run-up to the target would be a shame, especially if it is merely prelude to an even bigger rally, since gas prices have recently fallen below the $3 level for the first time in a long while. They hit $2.92 last week in the rural North Carolina town I am visiting, but if my forecast has got it right, pump prices will soon be headed once again above $3.00.
August Gold looks bound for a minimum 1903.90, but if that Hidden Pivot support gives way, look for the downtrend to continue to at least 1875.00. (A related p2 support at 1906.40 could also engender a precise, tradeable bounce). Both of those numbers can be bottom-fished with 'reverse' patterns and a theoretical trigger interval of $11. Since that would imply entry risk of more than $4000 on four contracts, you should initiate the trade only via an rABC set-up on the 15-minute chart or less and initial risk held to no more than $200 per contract.
Yet another week of tedious slop produced no change in my bullish outlook for the intermediate- and long-term. For now, August Gold's correction is targeted on 1903.90, a 3.5% drop from last week's settlement price. Neither bears nor bulls have shown more than slight interest in bullion since early March, and both will likely be bored out of their minds before the bullish trend resumes in earnest. The first hint of this would come on a pop above 2006.20, the 'C' high of the pattern shown. Otherwise, expect the weak, downward dirge to continue. ______ UPDATE (Jun 16,): The presumably meaningless rally that ended the week triggered the fourth 'mechanical' short since May 30. The first three produced a theoretical profit of $10,000 apiece on four contracts. Here's a fresh chart that shows gold's pooch-screwing price action. _______ UPDATE (June 20, 1:58 p.m.): With gold in its wonted gold-is-garbage mode, the 1903.90 downside target is looking increasingly likely to be reached -- and precisely, given the umpteen bounces the futures have taken from p=1956.10. An arguably even more appealing pattern projecting to 1892.10 will be in play if 1903.90 is exceeded by more than $1.00 or so. I say 'more appealing' because of the pert little alternative one-off 'A' at 2087 recorded on May 4.
Last week's bullish feint triggered a less-than-appealing 'mechanical' short at the green line (x=1980.60). The selloff into the close was bound for a retest of p=1955.10, but if this 'hidden' support fails, look for more downside to 1929.50, the secondary (p2) pivot. Bears have had trouble doing serious damage, so there's no reason to think the downtrend, a correction from May 4's 2102 high, is likely to reach the D target at 1903.90. That implies p2 should be bottom-fished, presumably with a reverse pattern of small degree (aka 'camouflage'). ______ UPDATE (Jun 5, 6:59 p.m.): We'll let gold bulls, bears and the Wharton-educated criminals who manipulate them bayonet each other bloody for a while, but by all means please nudge me in the chat room if you see easy money sitting on the table.
I've drawn a pattern that should suffice to contain the constipated price action of this flaky proxy for global manufacturing. What you can expect in the week ahead is more range-bound trading, but with the prospect of an enticing 'mechanical' buy if the April contract should come down to the green line (x=75.12). The implied entry risk of $10,000 on four contracts is too steep to initiate the trade conventionally, but it may be possible to cut that by as much as 90% with close attention to bullish entry patterns on the lesser charts. Stay tuned to the chat room if interested. _______ UPDATE (Feb 22, 10:01 p.m.): The trade mentioned above triggered, but only on paper, since no one mentioned it in the chat room. Whatever happens next, even if it's a breakdown, promises to be as inconsequential as everything else that's occurred on the daily chart since August. _______ UPDATE (Feb 25): Zzzzzzzzzzzzz. _______ UPDATE (Mar 11): Zzzzzzzzzzzzzzzzzzzz. _______ UPDATE (Mar 13, 6:40 p.m.): April Crude looked ripe for bottom-fishing this afternoon, based on the 70.50 D target shown in this chart. Alas, the futures turned higher from just above it, mooting the opportunity. The pattern seemed gnarly enough to work, but the fact that the three coordinates are so obvious when viewed at-a-glance might have argued otherwise. Today's price action leaves me more open to the possibility that crude may be carving out a short-term bottom. _______ UPDATE (Mar 15, 11:58 p.m.): Crude carved out a possible bottom all right (see above) -- with the steepest one-day plunge since July! The 65.65 low was foreseeable, or very nearly so, but arguably too distant from D=65.03 to cue up the kind of tight-fisted rABC entry we prefer. The bounce was ferocious, but it remains to be seen whether it
Although there's a solid consensus in the chat room that a major bottom is in and that my 1665.00 target will not be reached, I have my doubts. They are based entirely on the decisive downside penetration of p=1773.80 on July 5. I have only very seldom seen 'p' obliterated in this way without giving way to a follow-through that hit 'D'. If gold's robust two-day rally is going to be an exception, the first evidence of this would come with an impulsive thrust exceeding three 'external peaks that lie, respectively, at 1744, 1751 and 1771. That's the kind of power rallies typically exhibit when ending bear markets. If this one can vault all three peaks with no visually significant pullbacks along the way, I'd infer it is the real deal -- at long last. (July 27 note: For the December contract, the three peaks lie at, respectively, 1763.70, 1770.80 and 1785.80.)
Crude's gains toward the end of the week were impressive, but buyers looked winded when the clock ran out on them. Regardless, we should view the 99.85 rally target shown in the chart as a minimum upside projection for the near term. The pattern has already produced a $5200 'mechanical' winner on four contracts bought at the red line and would signal an equally promising trade if the futures were to swoon to the green line (95.89). ______ UPDATE (Jul 19, 6:50 p.m.): I've opened a larger 'reverse pattern' with a 110.78 target, since the D targets of smaller ones have gotten vaporized these last few days. Monday's impalement of p=100.67 implies a strong likelihood the D will be reached. A swoon to X would trigger a very attractive 'mechanical' buy, stop 90.55. ______ UPDATE (Jul 21, 11:14 p.m.): Here's a chart for the September futures, with D=108.25. A pullback to x=93.24 would trigger an enticing 'mechanical' buy.
