Gold

June Gold crushed a 1487.90 Hiden Pivot target on Friday, exceeding it by $12.  This all but guarantees lower prices, but we don't have much to work with in calculating the next tradable low.  I've settled on a pattern that is pure 'sausage' on the weekly chart, with a point B low that failed miserably to exceed any prior lows of significance. The pattern looks just as bad on the daily chart that I've provided here, but, as I mentioned in today's commentary, the 1414.50 target is good enough for government work.  In practice, this means we can use it as a minimum downside target, but also as a place to attempt bottom-fishing with camouflage.  _______ UPDATE (April 15, 12:11 a.m. EDT):  The futures have gotten sacked tonight, with a so-far low of 1422.20.  I am still recommending tightly stopped bottom-fishing near 1414.50, but if this Hidden Pivot gives way it would portend more slippage to 1371.70.  For information concerning the provenance of this target, check my post at 16:09 in the chat room. _______ UPDATE (8:26 a.m.): The Sunday night massacre has exceeded my worst-case Hidden Pivot target, with the June Comex contract hitting a so-far low of 1385.00. Switching to conventional technical analysis, there are now two numbers we should keep in mind as possible bear-market lows: 1) 1341, representing a 50% retracement of the rally from 2008's watershed low of 732; and 1188, a 0.618 retracement

On their way presumptively lower, the futures have detoured for the last two days.  The move is not quite a rally, but rather a sideways pause. Bulls could take mild encouragement if they succeed in pushing this vehicle the mere $9 it would take to create a bullish impulse leg on charts of lesser degree. (The move wouldn't quite be impulsive on the hourly chart because the 1556.40 peak I've labeled is not a true one.)

In the course of an interview I did yesterday with Al Korelin, I noticed something about June Gold's daily chart that I hadn't noticed before that accounts for this bounce from the recent low at 1539.40.  Turns out the low is just 1.40 from a bearish target that has been more than 13 months in coming. It shouldawouldacoulda been a great place to look for a 'camo' trade, since the low print would have been read as a breakdown beneath last May's key low  at 1545.00. Considering the extent that the futures would have been unburdened of bullish hopes and greed thereupon, the bounce is so far worrisomely lacking in vigor. Under the circumstances, a longstanding correction target at 1487.90 should continue to temper our enthusiasm whenever gold rallies.  That's a back-up-the-truck number as far as I'm concerned, but with risk very tightly controlled as is our habit.  Click here to sample Rick's daily touts and 24/7 chat room free for a week.

The futures exceeded our rally target by 3.00 points yesterday, implying that still higher prices are likely over the near term. The pattern shown is not especially compelling, but it's all we've got at the moment to project a new target. It lies at 1600.40, or perhaps 1603.60 if any higher.  Camouflage traders looking for friendly entry points might want to note that the respective midpoints of these D targets lie at 1592.10 and 1593.70.  Note as well that the higher of the two Ds will not quite see the futures above a key peak at 1602.80 whose breach would be needed to clinch a new impulse leg. _______ UPDATE (2:32 p.m. EDT): The rally sputtered out with a 1588.50 high overnight, opening the floodgate to sellers supposedly reacting to a negative outlook on gold from Goldman.  We know better, though. The futures are simply working their way down to a 1487.90 target that has obtained for some time. We should of course keep an open mind to the possibility of a real reversal at any point along the way. But let's not get too enthusiastic unless it's sufficient to generate a bullish impulse leg on the hourly chart. At the moment, that would require a ballistic upthrust that is uncorrected between 1590.20 and 1604.40 (see chart, a new one.)

I'd like to be more encouraging, but the unavoidable fact is that gold futures look like hell right now.  Notice that although the 1587.10 rally target is still valid because the point C low remains intact, buyers have been unable to muster the $3 thrust it would take to get there after nearly three days of trying. Further evidence of weakness is found in the failure of subtle camouflage opportunities to bear fruit. Bottom line: There is no compelling reason to be trading this vehicle at the moment. If you can't resist, I'd suggest using 1587.10 as a price objective and the 30-minute chart for locating a promising impulse leg.

June Gold was on its way to the 1587.10 target shown when the rally was waylaid by weekend torpor.  A pullback to the 1574.10 midpoint could yield a low-risk buying opportunity, but I'd recommend that entry be initiated only via camouflage, since our bigger picture target at 1485.60 is bearish and lies well below these levels.

We update our forecasts one predictable leg at a time, with targets that tend to work very precisely. (Click here if you'd like to verify this claim for yourself.)  And while gold may indeed be on its way to $5000 an ounce eventually, as some believe, or to $1000 or lower, as others are predicting, we find it more useful to traders and investors alike to focus on realistic targets and shorter time frames. Ultimately, no matter how compelling the logic behind a forecast, none of us can truly "know" where gold will be trading in six months, or in a year, or a decade. What we can know -- in this case, with about 90% confidence -- is that the June Comex contract will soon be banging on the 1487.90 (this corrects chart error) we've been drum-rolling here for a while.  We should also allow for a possible counterthrust from 1495.80.  This number is not a margin-of-error alternative, just a lesser 'Hidden Pivot' where bulls could conceivably dig in their heels. The coordinates yielding the higher target are shown in the accompanying chart, along with a corresponding 'midpoint support' where price action thus far has more or less corroborated the accuracy of the lower number. Will 1485.60 be as bad as it gets? Although we can make no guarantees, it looks like a compelling spot for buyers to arrest a bear cycle that has been savaging long-term investors since early October.  Another possibility is that the target, a Hidden Pivot support, will get steam-rollered by the decline. This would imply, not that the pivot didn't 'work,' but that the selling was strong enough to overcome it.  Our new target in that case would be 1414.50, and because it is the terminus of a bearish pattern even bigger than the

At yesterday's lows, the futures kissed an important trendline we've been monitoring for quite some time. As noted in my latest commentary, a decisive breach would send the April contract down to at least 1553.30, a Hidden Pivot, or to 1487.00 if any lower.  (Note: This tout introduces the June chart, with equivalent supports at, respectively, 1551.90 and 1487.90). Camouflage tactics can give us an edge here trading speculatively from either side of the market, since in our way of looking at such things, fear and panic register only as bullish or bearish impulse legs.  I'll suggest looking for your opportunities on the 15-minute chart or less, although it might take a day or two to create some choice 'external' peaks to leverage. As things stand, on the hourly chart, yesterday's downdraft left a cragless wall with no good handholds. Click here for information about the upcoming Hidden Pivot Webinar.

Gold could go either way, depending on how the Cyprus 'solution' is spun.  My hunch is that the outcome will be bearish for gold, with the implication that the April contract will fall to the 1553.30 target shown.  That's a midpoint HP support, and if it's decisively breached we could expect a further fall to its 'D' sibling at 1487.00.  Alternatively, the most constructive outcome for bulls over the near term would be an upthrust that exceeds 1619.70 (see inset), the point C high of the pattern yielding the downside targets given above.  As you can see, it would only take a small pop to get the April contract above that threshold.  Were that to occur, bulls would have the benefit of the doubt on any pullback, since it would be merely corrective -- and therefore buy-able -- on the intraday charts. _______ UPDATE (March 25, 4:25 a.m. EDT): Gold is up a big 10 cents at the moment, obviously relieved that 'only' depositors and bondholders will take a hit from the Cyprus affair. The action so far would seem to corroborate the bearish outlook detailed above.