Comex Gold Futures

Yesterday's funereal rally may have extended Gold's winning streak to four days, but it was quite a bit less than we might have wished for. Notice how it apexed without taking on the look-to-the-left peak recorded on December 17.  Such tired action demands that we set the bar high today, and so we shall:  at 1143.40, a crucial dime above the peak I've circled. Even so, a lesser thrust that pulls back after barely exceeding 1132.30 could yield an excellent camouflaged buying opportunity with relatively little risk.

Enjoy the rally, but count on me not to get terribly excited about it, at least not yet.  If this is the real deal, we should see an effortless extension of the bullish impulse over the next two or three days.  That means taking on any or all of the four unbreached peaks immediately above on the hourly chart. It will require a  nearly $50 thrust from here to get past the bunch, the topmost of which lies at 1168.90 and the most immediate of which is at 1142.90.  Let's use the higher number as a "bullish-as-all-hell" benchmark for this first week of 2010.  For those who remain anxious, let me note that the rally is already impulsive on the daily chart (see inset), and that the bullish implications thereof will hold as long as the futures don't relapse below 1086.60.

A message that I left in the chat room bears repeating, since it was meant to allay anxieties concerning this so far garden-variety correction. I am trying to forecast bullion prices with coldly mechanical detachment. A potential benefit to subscribers is that they will not have to awaken each day with their nervous systems hard-wired to Comex Gold's 15-minute chart. As I tried to make clear the other day, there is no way gold can change directions on the hourly chart, embarking on a major rally, without telling every chartist on the planet that it is doing just that.  In the meantime, I would encourage all who follow my touts not to sweat the details.  However, if I have failed to discourage some of you from overtrading a vehicle in which you have an emotional stake (i.e., a "jones"), then by all means, buy gold speculatively and repeatedly at Hidden Pivots as you please, since it won't cost you much if you're wrong -- and because one right guess can make up for a multitude of wrong ones. Concerning actual targets, a disinterested reading of the hourly chart suggest that the futures are likely to fall to at least 1046.80 before they can turn around. However, a rally first that exceeds 1114.50 would negate the target, and a print today or tomorrow exceeding 1122.50 would likely be enough to send shorts diving for cover. Camouflage  entry is suggest along the route of such a rally, but if the futures fall, the first place where they could be bottom-fished with a tight stop-loss would be at 1080.60, the C-D midpoint of the pattern shown in the chart.

There was less to yesterday's rally than is apparent at a glance, since a close examination reveals that it peaked without exceeding the overnight high.  One needs to drop down to the 15-minute chart to find an impulse leg, and the only valid one evident is the pisher shown in the chart.  It is part of a pattern that projects to 1098.50, but we'll set the bar a tad higher, at  1100.40, to alert us to the possibility that the rally is more than mere noise. _______ UPDATE:  Although February Gold managed to exceed 1100.40 by seven points, it failed nonetheless to rise above categorization as mere noise.  Tellingly, the peak failed to surpass a point 'C' peak that had yielded an earlier 'D' target at 1091.30.  For those looking to catch the ultimate low of this trying correction cycle, take comfort in the fact that Gold is incapable of fooling even the Village Idiot here. If it's going to turn around, it cannot do so without signaling the world via a bullish impulse leg on the hourly chart.  In the meantime, it needn't cost us anything to buy speculatively and repeatedly at the targets and midpoints of corrective patterns, as well as at the 'X' entry points of camouflaged rally patterns on the very lesser charts.

Shortly after 8 p.m., the futures were struggling to find traction at 1091.30, the very tradable Hidden Pivot support shown in the chart. They'd need to rebound to at least 1110.60 on Wednesday to turn the momentum in bulls'  favor;  otherwise a 1046.80 target will be in play, along with another at 1028 that comes from a larger pattern identified here earlier.

Gold was having trouble Sunday night sustaining a modest short-squeeze leap recorded when trading began.  Sellers were not having much success either, however, suggesting things could go either way. A minor breakdown would likely test support at 1104.10, a Hidden Pivot, but if buyers are going to take charge, the turn should come from no lower than 1106.90 (its midpoint sibling), give or take a couple of ticks.  An upthrust exceeding 1122.50 today would clinch the bullish case for the near term, but that benchmark lies a tad beyond the nearest Hidden Pivot rally target, 1118.00.

Gold was moving effortlessly higher Wednesday night even though the Dollar Index was off just slightly, suggesting there are committed buyers behind the rally.  The high so far is 1103.70, the precise target of the pattern show in the chart, but any progress above it would portend a minimum 1107.50/1108.60.  To determine whether this surge is more than a one-day wonder, we'll use 1123.90 as a benchmark. A print today at that price would shorten the odds that an important bottom is in.

Here's a 240-minute chart that clearly shows the provenance of the 1059.80 target drum-rolled in today's commentary. Pivoteers should find some things to love here, including a "sausage B"  that was followed by another down-leg that exceeded no fewer than three (!) external lows.  The 'A'  is an over-the-falls, single-bar gem as well, and that's why I find the pattern so very compelling. If and when the futures fall to the pivot, you can bottom-fish there with a stop-loss as tight as $1.00.  If this should occur on Thursday, I'd suggest exiting the trade if it has not gone at least $6 in-the-black by the bell.  Please note:  The bullish benchmark at 17.605 that I've flagged in Silver has an analog at 1122.75 in February Gold. That would be quite a rally, for sure, but it would take no less than that to dispel all doubts that bulls are back in the driver's seat.

A major trendline and two notable Hidden Pivots come in around $1090, so we'll just have to cross our fingers. Gold is obviously a speculative buy here, but the chart leaves no doubt  that a decisive breach would grease the skids down to as low as  1028.  That was the point of departure for the powerful rally begun just before Halloween, and it is a logical downside target in the event of a breakdown. Traders looking for a camouflage opportunity to get long should focus on the three- and five-minute charts all the way down to 1086, since a false breakdown could conceivably need that much space to panic nervous traders.  (Late note: a midpoint support at 1093.30 must hold Monday night if a bullish turn is coming.  This appears unlikely at the moment.)