Comex Gold Futures

My immediate outlook is bearish, but there's not much to work with on the hourly chart to predict how bad the next leg down will be.  Assuming yesterday's bounce from within a tick of the featured pivot at 1106.90 is a distribution, it doesn't looked sufficiently developed yet to engender an equally nasty C-D follow-through.  However, since this assumption is all we've got at the moment, I'll go strictly by-the-numbers, using the obvious abc coordinates shown in the chart.  They yield a 1090.30 target, subject to a bounce at the 1103.20  midpoint support.  Both numbers would be invalidated by a wee rally surpassing the 1116.20 point 'C' overnight.   Alternatively, and once again, we'll use 1154.00 as a benchmark to alert us if bulls have sprung back to life.

The 1106.90 downside target broached here yesterday is looking increasingly magnetic, along with another at 1111.30 that can be used as a minimum downside target through Thursday.  Alternatively, the futures would still need to hit 1154.00 today or tomorrow to suggest that the tide is about to turn again in bulls' favor.

What the bullish pattern shown in the chart lacks in subtlety it makes up for in robustness.  The pattern is in-your-face obvious, with key resistance at 1074.90 -- a midpoint Hidden Pivot that was missed by 12 points at the top of the last rally cycle. This is not a sign of serious weakness, but neither does it portend an imminent show of strength.  A few weeks of tired consolidation would be congruent with the technical signs, and that is what I am forecasting for now. This bland outlook would be affirmed by weakness  today or tomorrow that breaches the 1126.50 low recorded on Friday.  That number lies within three ticks of a midpoint support at 1126.80, and a close below it would grease the skids down to 1106.90, its 'D' sibling. Alternatively, and very bullish, would be a rally today or tomorrow that hits 1154.00.  That would create a bullish impulse leg on the hourly chart that would be especially encouraging, since it would relegate the corrective abcd to the failure bin.

Don't sweat it until this vehicle hits 1175.00, an important midpoint resistance broached here earlier that comes from the weekly chart. That is my minimum upside objective for the near term, and it will pose a key test.  We should not exhale a sigh of relief until the futures have closed above it for two consecutive Fridays.  A long time to hold one's breath, for sure, but we don't want to buy into a false signal here.  Most immediately, you can try bottom-fishing the 1129.00 Hidden Pivot support shown in the chart with an 1129.20 bid, stop 1127.90.  If the stop is hit, February Gold will be facing jeopardy over the near term to as low as 1111.30, the 'D' sibling of 1127.90.

When I projected a low in February Gold at 1107.70 yesterday morning in the chat room, I was pretty confident the Hidden Pivot support would be reached, since its midpoint sibling at 1122.50 had been exceeded by a very decisive $4, and because the pattern itself was close to perfect.  Instead, and much to my surprise, the futures turned on a dime at 1118.50, seemingly in the middle of nowhere, gaining $27 by the bell.   After-hours trading pushed the rally the few ticks higher needed to trigger the breakout above 1138.60 that I'd been looking for.  If you were looking for camouflage to get aboard at that point, although it came with great subtlety, as long as you applied the simple rules, it wasn't hard to find or to use (see inset). Looking ahead to Thursday, we should take encouragement if yesterday's precipitous reversal racks up a couple more "external" peaks to solidify the uptrend. That would imply a print at 1158.40 at a minimum, and it would put a midpoint resistance at 1175.00 in play thereafter as our minimum upside objective. That number is part of a pattern begun from 1028.00 just before Halloween, and if it completes to the target, that would imply 1274.70.

Yesterday's fright-wig plunge didn't even qualify as impulsive on the hourly chart. The reason is somewhat technical, and I've attempted to explain why in the accompanying chart. However, the fact that sellers failed to do their worst is no reason to celebrate, since they could easily return today in greater numbers to finish the job.  There are two Hidden Pivot supports below that we can monitor to get a sense of how determined the sellers are: the first lies at 1117.60; the second, its 'D' sibling, at 1102.80. The lower support looks like a more conservative play for bottom-fishing, since the higher number coincides with a bunch of lows recorded a week ago.  Alternatively, the most bullish thing I could see happening over the near term would be an upthrust touching 1138.80.  That would create a bullish impulse leg on the very lesser charts, and with it the possibility of some base-building into week's end.

So that it can be found archived in the touts section, let me repeat the outlook for February Gold discussed in today's commentary:  To keep shorts on the defensive, the futures will need to push on, taking out the fifth peak at 1170.20 shown in the chart.  A vigorous effort should take no more than one or two days to succeed, and we should expect no less if bulls are to tackle the all-time high at 1227.50 with overwhelming power.  To put it another way, the ease with which the futures get past 1170.20 is likely to be predictive of how easily they surmount resistance at 1227.50.

The futures are showing savage power Sunday night, riding the strongest night-session surge that we can recall in a long while. At their peak, gains totaled around $25 for the session, although the futures have pulled back by $10 since and are consolidating in the early evening (EST).  My minimum upside target for the near term is 1166.70, a Hidden Pivot that lies just above the so-far high at 1163.00. If the futures push above 1166.70,  expect resistance at 1169.60, representing a 0.618 retracement of the correction begun from 1227.50 a little more than five weeks ago.  It would take just a hair more to extend the impulse leg so that it  has taken out a fourth "external" peak at 1170.20, but even without this, shorts are already dead meat as we begin the new week.

Someone in the chat room spied an 1123.60 support early Thursday evening, and although it seemed to be holding, I would limit its use to analysis but not bottom-fishing. The point 'B' of the pattern is as sausage-y as they come, having failed to penetrate the juicy 1127.60 low recorded the previous day.  That doesn't mean the target is worthless: it is still the lowest low that can be projected on the lesser charts. But because of the malformed 'B', we shouldn't expect a precise and reliable bounce from the target; rather, we should go no further than inferring from the probable breach of the target that still more weakness lies ahead.  (Bulletin 9:50 p.m. EST): Within the last 30 seconds, the futures have spiked down to 1121.60, presumably stopping out 1123.60 bidders. Action looks pretty sleazy overall -- DaBoyz setting up for fabulous job numbers on Friday? -- and so I would further caution against picking bottoms based on whatever patterns you might be imagining.)