GCZ10

If gold is finished with its pullback, it will soon confirm important new bullish targets at 1431.6 and 1481.0.  Yesterday's forty-two-dollar decline in the gold futures from an all-time high has created a pattern with striking symmetry between the pullback and last week's "kA" segment.  If the "C" point at 1382.3 holds and the futures move back up, they will confirm this new pattern and the aforementioned targets, as pictured in the attached graphic.  The odds of this happening will be diminished if gold trades down a few dollars to 1392.3 and does not revisit the current session high of 1402.9.  This would confirm a smaller, bearish pattern which was initiated by the drop yesterday and would suggest a move down to 1381.9, a midpoint pivot, and to 1360.8 if the midpoint gives way.  This midpoint would be a risky trade, as it is just below the "B" point made by yesterday's low, but the sibling "D" target of 1360.8 can be bought with an order a few ticks higher and a stop at 1359.9.  Pivoteers should recalculate the targets if 1402.9 is surpassed, thus moving the "C" point higher, and a decline follows.  (Posted by Doug McLagan) _______ UPDATE (9:45 a.m. ET):  The bullish pattern has been confirmed, and the bearish pattern has been activated with a higher "C" point of 1410.0.  Buyable pivots are now at 1389.0 and 1367.9, so long as 1410.0 holds.

Gold's upward momentum continues, and traders should look for small patterns that will facilitate long-side trades.  With another all-time high early in today's trading session, we again have no downside targets to work with.  But at the moment, a camouflaged entry opportunity would arise if the futures rallied to slightly above the high of 1413.3 and then pulled back, as shown in the attached picture.  If this set-up does not materialize, refer to it as an example of one way to approach this market.  Should any bearish patterns emerge, traders should give serious thought to buying at the pivot levels.  Between the current price and the $1460 area mentioned in yesterday's tout, there are many valid targets.  As for where a significant decline in the gold price might begin, we will say that $1460 is the best bet, but we don't necessarily think it's a good bet, as the world might now be slipping into a mad rush for the yellow metal.  (Posted by Doug McLagan)

With gold making all-time highs on Friday and nearly so in the early hours of today's session, the patterns are essentially all bullish, and the targets are numerous.  A robust pattern on the monthly chart of the December 2010 contract gives us a "D" target at 1400.8, and the futures have come within three dollars of that target three times since Friday morning.  This is quite close, given that the "C" point is more than $350 lower.  Gold's explosive rally from the low that followed Wednesday's FOMC announcement launched a new intraday pattern whose midpoint is 1406.3, which nearly coincides with another pivot first touted on November 1.  This new pattern is depicted in the attachment.  Should its "D" target of 1440.8 be reached, gold would be very near completing its largest active pattern, the one that begins in 2001 and whose pullback came in 2008.  The "D" target for that pattern is around $1460, varying only slightly according to the data set used.  What's a gold trader to do?  We would emphasize the long side, but don't rule out a deeper decline from the 1400.8 pivot, which has already been "hit."  (Posted by Doug McLagan)

A feisty charge after-hours has lifted the futures above the ostensibly daunting peak at 1388 recorded on October 14.  In all of human history, that was the highest price for which an ounce of gold had ever traded.  And so we must infer that the good guys were feeling pretty confident when they decided to take on a millennial peak at a time of day when most U.S. traders were headed to dinner.  The move so far has reached 1394.40, and although that's 12 bucks below the 1406.70 target we've been using as a minimum upside objective, it seems a foregone conclusion that buyers will put the finishing stroke on the rally before trading opens in New York Friday morning. I've extrapolated yet one more target from the pattern -- 1427.50, and it looks sufficiently compelling on the hourly chart (see inset) to use as a new minimum for the bull cycle begun on September 28.  Please note with traderly caution, however, that 1400 may prove to be other than a piece of cake.  For one, it represents an important round-number resistance; and for two, 1400.80 is the D target of the following pattern on the weekly chart: A=882.30 (4/17/09); B=1234.90 (12/04/09); and C=1048.20.

For all of the opaque tedium we experienced yesterday in the broad averages, bullion went transparently nuts -- ostensibly over the m-o-m-e-n-t-o-u-s and life-saving announcement of $800B (give or take) worth of QEII in the offing.  The final bull's-rush at the end of the session recouped about half of the day's big loss, but fans of the yellow metal will be pleased to hear that all of the hysteria changed nothing in the immediate forecast, which remains bullish.  A midpoint resistance at 1371.60 is still the number to beat, and a close above it would portend more upside to at least 1406.70.  Night owls will not be able to bottom-fish the midpoint of yesterdays high-low-recovery high 'abc', since the pattern is just too gnarly. Nor will the lesser patterns work for boarding a 'camo' uptrend, since the one in progress as of around 7 p.m. Eastern has already used up the supply of 'look-to-the-left' peaks that conduce impulse legs.

Once the 1371.60 midpoint resistance noted here earlier gives way to buyers, the futures should be presumed bound for a minimum 1406.70, a Hidden Pivot also flagged earlier.  For night owls, a not-very-enticing, minor midpoint support beckons at 1352.60, but it's worth no more than three ticks' initial risk if you try to bottom-fish there.

We shouldn't doubt that higher prices -- make that, much higher prices -- are coming in 2010, but the futures seem in no great rush at the moment to make it happen.  Any 'abcd' pullback is a good place to try to get long, though, since downtrends in all time frames continue to struggle for yardage.  A 1371.60 midpoint target remains viable for the near-term, but it wouldn't take even that much to refresh the bullish trend on the hourly chart via the creation of a new impulse leg. The accompanying chart shows how this would occur.

The futures easily surpassed the "soft" peak at 1358.90 on the hourly chart, so it is appropriate to shift our focus toward bullish targets rather than worst-case correction scenarios.  Two logical rally objectives shown in the accompanying, hourly chart deserve our attention:  1406.70 and  1427.50.  Their respective midpoints lies at  1361.20 (already surpassed) and 1371.60.  The latter Hidden Pivot ('p') can serve as a minimum upside target for the moment, but if it's exceeded on a closing basis or by more than two points intraday we'll raise our sights to 1406.70.

Most of yesterday's gains were compressed into a few minutes, so it was easy to miss the train. Now, the lesser charts point moderately higher, into the mid-1350s, but the hourly chart suggests that more corrective action may be needed to set up the next thrust. Bearish targets at 1291 and 1278 remain valid in theory, but we'll go with the uptrend until such time as it flames out.  1359.00 is still the number to beat.