Comex Gold Futures

A rally target at 1174.90 is still our minimum upside objective, although it has the potential to produce an important top. Night owls looking for a way in can test the water at 1136.80, stop 1136.20, provided 1142.50 is not exceeded to the upside first. If the stop is hit and the futures go just a bit lower, exceeding 1135.40, that would turn the lesser charts decisively negative for the near term. _____ UPDATE (2:00 p.m.): My niggardly stop-loss missed the low of a terrific rally by three ticks.  Meanwhile, Harry, weighing in last night in the chat room, had the right idea, since his stop at 1135.80 was protected by a prior low just above it and the round-number stubbornness of 1136.00. 

The futures were working on a bullish flag Monday night, tracing out a correction that had gone as low as 1135.90 as of midnight EST. If the low holds, a pop to 1151.30 should come next, provided the 1143.60 sibling midpoint of this Hidden Pivot yields to buyers.  The 1174.90 target of a much larger pattern is still my minimum objective, but a dip today touching 1123.20 would be reason to turn cautious.

There were some minor rally targets just above Friday's highs, among which 1126.00 looks to be the most useful.  This is not a number to short; rather, we should look for an unlabored move through it to confirm that the futures are still tracking a course to at least 1134.50, a Hidden Pivot that was narrowly missed last week.  Above it sits another, more important, target at 1174.90 that will be the most crucial gold has faced in a long while.  I do expect it to be reached, but we should monitor the hourly chart closely nonetheless, since a trend failure that falls shy of it (or shy of 1134.50, for that matter) could have bearish implications for the intermediate-  to long-term. I have included a chart that shows how both targets were derived.

Gold peaked $11 shy of an important Hidden Pivot target at 1134.50 yesterday, then got clobbered by the steepest dollar rally in, oh, two weeks.  While we are obliged to take the rally seriously, we have an equally serious obligation to make certain that it proves itself each and every step of the way. (See today's DXY tout for precise benchmarks by which to judge any success thereof.)  If you were trading gold futures, including against a long-term position, a trailing stop of about $4.50 should have been considered, since profit potential from the intraday high was about 2.5 times that. Looking immediately ahead, the correction pointed to a tradable low at 1098.10 (stop 1097.60); or if not there, at 1095.90 (stopped according to taste).  We should infer that more selling is coming if those Hidden Pivot supports give way within 30 or so minutes of first being touched.

Let's see how the futures react with an important Hidden Pivot target at 1134.50 before we assume that the next, 1174.90, is a done deal.  And it will be, I should think, if the rally exceeds the lower number by more than 1.40 intraday or closes above it. Given the intensity of the rally, genuine camouflage is apt to be hard to find, but it bears noting that most of the impulse legs on the lesser charts yesterday did not try to be coy.

The 1134.50 rally target that has served us so well for months is not technically in play for trading purposes until the futures put a lesser Hidden Pivot at 1111.90 behind them.  Monday's punch-through high at 1111.70 obviously didn't do that, but it would take only 1113.10 or so intraday to get the job done.  To that end, yesterday's leap to nowhere, gratuitous though it may have seemed, was constructive in that it demonstrated that the futures are having more trouble going down than up. Note in the accompanying chart how the corrective abcd reversed from three ticks below its HP midpoint.  There is mild weakness implied in this action, but it is probably merely corrective, since the 30-minute rally that followed exceeded an "internal" peak, creating a dueling effect.

The 1134 target is important enough that we should begin to monitor the futures closely for trouble even now.  Another reason for caution can be seen in the monthly chart reproduced alongside.  It yields an 1106.80 target, and although this number comes from composite highs and lows on a continuous monthly chart, a single-month chart would not yield significantly different results (i.e., the point 'C' low for December Gold was $699; on the continuous monthly chart, it is 690.80). Most immediately, we can use a corrective pattern on the 30-minute chart to warn of even minor weakness.  Points A & B have already been established, respectively, at  1108.60 and 1100.70 (both from yesterday), but a tentative point 'C' at 1104.70 may not hold. In any event, this is the pattern you should use to determine a midpoint that evinces visible support for the corrective pattern.  If this pattern were to overshoot its 'D' target, that would raise a yellow flag. _______ UPDATE (4:43 a.m.):  We tracked the futures in the chat room as they headed lower overnight. They eventually bottomed within two ticks of a 1097.00 target (15-min, A=1109.90, B=1100.70) and appear to be returning to health as of 4:42 a.m. I'll feel more confident if and when the rally exceeds a look-to-the-left peak at 1106.40 made on the way down yesterday.

My minimum upside projection for the near term is still 1111.90, and December Gold's interaction with that Hidden Pivot seems likely to tell us how much buying power may be percolating beneath the surface.  If the futures close above it, or exceed it intraday by more than $1 or so, we can infer that a target of greater magnitude -- one at 1134.50 first broached here a while ago -- is a good bet to be reached.  Regardless, I will continue to monitor gold's vital signs closely on the intraday charts, since we wouldn't want to miss an important turn that occurs without the targets having been achieved. ______ UPDATE: As expected, the futures rallied $10 bucks, making their intraday high at 1111.70 before pulling back to $1100. The next compelling target lies at 1134.50, but the December contract will need to get by 1111.90 first.

The futures have been scuddling sideways for two days, biding their time as a short squeeze has played out in the broad averages. However, my minimum upside target for the near-term remains unchanged: 1111.90.  I'd turn cautious at that point and remain so until we see a close above 1114.50, a Hidden Pivot that comes from the monthly composite chart. A decisive push out of this resistance zone would indicate 1134.50, a target first broached here a while back.  Most immediately, night owls will be bucking heavy chop and a weak ceiling at 1097.80, the target of a minor uptrend.  Entry has already been triggered at 1090.25 and is subject to midpoint obstruction at 1092.70.  A pullback from within a few ticks above that number would offer some camouflage, but you may hav to act quickly to employ a buy-stop entry.