GCG12

With the decisive breach of the 1593.30 midpoint support shown in the chart, the futures appear to be headed down to at least 1571.00, its 'D' sibling.  Please note, however, that an uptrending reversal without having reached that number would be warning shorts to step aside. The bullish scenario would be actualized by a push past the midpoint resistance of a larger, bullish pattern begun on December 15 from 1566.20. ______ UPDATE (10:42 a.m. EST):  Gold is getting hit today and was down $25 at its so far low -- 50 cents from my target -- at 1570.50.  If you camo'd your way aboard near the bottom, keep in mind that a decisive breach of the so-far low would portend more slippage to as low as 1445.70 (!), a very important Hidden Pivot that comes from the daily chart (A=1760.50, B=1562.50 and C=1643.70.)

Comex futures have begun trading Monday night but are barely registering a pulse.  February Gold is down 0.40 at the moment, trading 1.70 off the so-far low, and although there are possible camouflage opportunities to be detected on the one-minute chart, it will probably be more trouble than it's worth trying to initiate trades overnight.  Even so, I've included a chart that shows numerous external peaks that could useful for this purpose. ________ UPDATE (7:44 p.m.):  My advice is to stay clear. The predators who work the night shift are very much in charge right now, having engineered an air pocket moments ago that hit a 1600.20 downside Hidden Pivot target to-the-exact-tick. Even if we had been bidding at that price, there would have been no fill, since only a handful of contracts traded at the low.

Night owls should train their attention on the Hidden Pivot midpoint at 1604.00 shown in the chart, since it might be the best opportunity you'll have to try bottom-fishing.  Risk no more than $60 per contract initially, implying you'll need to get long via camouflage. You can bid 1604.10 straightaway, stop 1603.80, but that is a riskier way to go. Please note that the futures will be signaling a further fall to at least 1586.00, the 'D' target of the pattern, if the midpoint support is brushed aside. ______ UPDATE (1:48 a.m. EST): Cancel the order. Word is that Morgan, Goldman and a cabal of bullion bankers front-ran us on this one.  The so-far low of the night is 1604.40, three ticks shy of our bid, and the bounce from it, to 1610.80, would have been worth a cool $640 per contract to us on paper.

Buyers could have an excellent opportunity to get long via camouflage using the price points shown and the subtle ABC pattern thereof. Buy one contract using a buy-stop at the still-undetermined 'x', but step it up to four contracts if you're able to use 'camo' in a pattern of lesser degree with theoretical entry risk of $70 or less. If things play out close to how I've drawn them, I'll establish a tracking position for your further guidance. _____ UPDATE (10:30 a.m. EST): If you'd drilled down to the 5-minute chart when the futures, at around 4 a.m., first exceeded the 1635.20 'external' peak shown in the chart, you could have caught a ride with perfect camo on the pattern A=1631.60, B=1636.30 and C=1633.10. Entering at x=1634.30 and taking a partial profit on half the position at p=1635.50 would have left you with two contracts and an effective cost basis of 1633.10, with a further reduction to 1628.40 after exiting a third contract at D=1637.80.  Thereafter, you were on your own, but if you'd stopped yourself out of the final contract by waiting for a bearish impulse leg on the 5-minute chart, you'd have exited the position at 1633.00 for a theoretical gain of $460. More profits were not to be, at least not from the long side, since DaBoyz pulled out the rug after the not atypical, sleazy, overnight top-and-relapse price action that followed. Unfortunately, and unlike what has occurred in the index futures, this selloff is happening without having created a bullish impulse leg on the hourly chart. Buyers could have done so with just a little bit more oomph, but as things stand, the high-water mark missed exceeding December 13's key high at 1645.50 by 2.20. NOw, short-term bulls could regain their mojo with a push exceeding

I'd be surprised if the next big rally doesn't come after late September's 1543.30 low has been broken, but we should be ready for one nonetheless.  Although there's no compelling, big-picture reason to try to get long at these levels via camouflage, the felicitous tedium of retracement rallies could provide us with some very low-risk spots to attempt it. For a precise idea of what I'm talking about, check out the annotated chart (inset), which shows two bullish patterns tied to a look-to-the-left external peak at 1611.40. (And yes, I know it is not a strictly-legit peak, since there is no stick-down low preceding it). Subtleties like the one shown, with a big-pattern impulse leg that has qualified as such by a single tick, are exactly what we should be looking for to get long.

Trading has begun Sunday evening with a likely head fake (aka bull trap), since the initial, distributive rally could not get past the look-to-the-leftish peak at 1611.40 (see inset).  Buyers could turn things around by exceeding that peak before dawn, but we should set the bar a little higher, above the peak at 1620.80, just to be sure.  Bears would regain the offensive on a downdraft that exceeds lows #1 and #2 without an intervening b-c rally.

We already know the bad news -- that the futures appear likely to fall to at least 1459.40, or to 1424.80 if any lower -- so let's shift our focus to some bullish alternatives just to keep an open mind.  For starters, the good guys could retake control of the 30-minute chart with a thrust over the next 2-3 days exceeding 1635.20, a small peak made Wednesday on the way down.  However, a more subtle signal -- view it as an early alert -- would be generated with a print today at 1590.20. Depending on how the rally from Thursday afternoon's low plays out, a pullback from just above that number could create a low-risk entry spot for camouflageurs.  I've sketched out this possibility on the accompanying chart. _______ UPDATE (3:45 a.m. EST):  A pattern much like the one I sketched -- with single-bar coordinates at points A and C -- tripped an entry signal at 1588.20 at around 12:20 a.m. (A=1585.60 at 10:30 p.m., B=1592.10, and C=1586.50). Half of a four-contract position would have been exited at the 1589.80 midpoint of the pattern, and a third contract at 1593.00, the D target of the pattern. Imputing theoretical gains of 6.40 to the contract that remains yields an effective cost basis of 1581.80.  For now, use a stop-loss at 1579.70, a few ticks below the 'd' target of a minor, corrective ABC that was playing out at around 3:45 a.m. If the futures turn and go higher without triggering the stop, use a 3.20-trailing stop above 1601.00.  We're not swinging for the fence on this one, but we are going for extra bases. _______ EXIT UPDATE 11:05 a.m. EST):  The futures spiked to a high of 1603.50 at 7:35 a.m., and so we exited at 1599.50 when they detumesced. The

A 1459.40 target identified here earlier might not be the  worst of it, at least for this bear cycle, since it is tied to a one-off point A. Using the highest 'A' on the chart, 1925.10, yields a somewhat lower target at 1424.80. The pattern, as you can see for yourself, is too clear and compelling to produce a 'D' target that does not provide a tradable bounce. However, as is our practice, we'll wait and see what happens at the support before we infer that even lower prices are likely.  And, as always, we'll remain open to the possibility of a bullish turn from somewhere above the projected low.  The first place a meaningful reversal might be signaled is via the creation of a bullish impulse leg on the hourly chart. Let's raise the bar a bit, though, and use the 240-minute chart to be sure. In that time frame, it would take a rally to 1681.80 to give bulls a fighting chance.

If Gold got smacked yesterday when shares were buoyant, we should expect it to fall even harder when stocks finally take account of the disaster shaping up in Europe. Yesterday's plunge seriously damaged a crucial support at 1633.10, raising the odds that the bear cycle begun in early September from $1925 will eventually fall to 1459.40. A move to at least that low looks like about a 2:3 bet at the moment -- a 60% shot.  We'll keep an open mind about this, but please note that it would take a thrust to at least 1832.50 for bulls to go back on offense on the daily chart.  Achieving this even on the hourly would take a burst in the days ahead that is uncorrected between 1681.80 and 1728.00. The two external peaks that would be surpassed impulsively by such a move are highlighted in the accompanying chart.