Ten mincing steps higher, one or two devastating steps back. That's the way gold rolls. It is such as nasty little sonofabitch that we can only infer Mr Market is intent on terminally discouraging every last bull before he lets it fly. The chart shown is short-term bearish, although not horrifically so. It suggests the futures are on their way down to at least 2017.50 most immediately. There's a chance it could catch a bounce at p2=2028.50, in which case you'll want to use a tight trigger interval of perhaps 2 points for bottom-fishing. Make sure it's tied visually to a clear 'a-b' leg on the 30-minute chart or less. There is also voodoo number just above p2 that I will leave to be discovered and used by hawk-eyed Pivoteers.
Gold is technically in a bullish phase, having completed a correction down to the 201.40 target of the reverse pattern shown. The initial move off the low was sufficiently robust to affirm the bullish picture. However, price action since has been feeble, presumably because the steep, month-long rally from October's 1861 low needs more time to consolidate before the futures embark on another powerful run-up. We can only bide our time while bullion dithers, since trading the relatively small oscillations is hard work. I will signal nonetheless if an exceptional opportunity (i.e., a potentially important low) should develop.
I wouldn't trust a rally if it starts the week, but neither am I inclined to bottom-fish until such time as the futures drop into 'voodoo' territory just below 2000. A dip beneath two January lows near 2004 is obligatory in any event, so let's watch for it to develop. If and when that happens, we may be able to find a reverse pattern trigger of small degree to catch a ride north. Big, meaningless days seem to be cropping up with greater frequency lately, so we should resolve to remain unexcitable if anything interesting appears to be happening.
Gold has relapsed to the green line twice since triggering what had looked like a fine mechanical buying opportunity shortly before Christmas. It has done little since but tease, vex and antagonize, but if past is precedent, the tedium will be broken soon by a big rally to the 2184.80 target shown. That's no assurance that buying now, at levels beneath where we might have been long anyway, will produce a better trade. Since the futures remain in theory a good bet to rally back up to p=2086.40, we'll continue to look for ways to get aboard with risk tightly controlled. The entry risk for the 'textbook' 'mechanical' buy was $20k on four contracts.
Feb Gold's bounce from the green line took time to develop and is still not airborne. But the uptrend should at least reach the red line, validating the strong 'mechanical' buy signal that triggered on the pullback. We are used to disappointment in this vehicle, and impatient about when the long-term bull market will once again shift into high gear. When it does, the next target of consequences above the one at 2184.80 show in the chart lies at 2273.60, a Hidden Pivot resistance derived from a continuous monthly chart where A=681 in 2008.
The futures made a little headway toward the 2184.80 target with a marginal penetration of the pattern's midpoint resistance, p=2086.40. The target is slightly higher than the one given earlier, which used a one-off 'A' on the hourly chart. A pullback to the green line (x=2037.10) should be treated as a gift, since it would enable a 'mechanical' buy that looks quite fetching in prospect. The implied 50-point stop-loss would demand the use of a 'camouflage' trigger designed to cut entry risk by at least 90%. I will furnish timely details if possible, so be sure to check your email 'Notifications' if the trade gets close. _____ UPDATE (Jan 5): Sellers pushed the futures down to the green line, triggering a 'mechanical' buy with an unacceptably wide stop-loss at 1987.80. I did not put out a trade because there was no a-b segment clear enough to set up a lower-risk, reverse-pattern entry. We'll spectate for now, but with the goal of jumping in on the long side if the right opportunity comes along.
Not sure why the rally couldn't go the extra millimeter to achieve the 2086.40 rally target I'd set as a minimum target last week. To ease the burden on intermittently enfeebled buyers, I've lowered the bar slightly by shifting to a slightly higher 'A', a pretty little one-off low that I might have used initially. The correspondingly low p at 2084.60 hasn't changed the fact that bulls will need to blow past it to become a good bet to reach D=2181.20. In the meantime, don't pass up an opportunity to buy a swoon to x=2036.20, provided you know how to set up a 'camo' trigger to reduce the theoretical entry risk of nearly $20,000 on four contracts.
Feb Gold has been the unwitting slave of the bullish pattern show, with a 2250.00 target that has been in play since mid-October. The bounce off last week's low was encouraging, since the futures managed to finish the week with a gain that left it comfortably above the midpoint of the weekly range. Nasty takedowns are still possible, but $2000 may have become a floor beneath which bulls would swarm thin, insincere offers. _______ UPDATE (Dec 19, 1:47 p.m.): I said in the chat room that Feb Gold would hit 2086, but Martin Armstrong's cautionary cited in the chat room has reminded me that I should wait for that to happen instead of pretending I have a crystal ball that says it will. The chart is mildly encouraging because the recent high at 2152 impulsively exceeded May's 2140 peak. That means the subsequent plunge to 1987 was/is corrective. But there are no guarantees that the theoretical buy signal at x=2037 will get the futures to p=2086.4. I do hope this happens, however, since price action at p can tell us a lot about the health and sincerity of the uptrend since October. In theory, the bullish impulsiveness of the weekly chart could survive a plunge all the way down to 1845, even if few bulls would be left standing to cheer it.
Friday's dastardly takedown put the February contract on course for a drop to at least 2001.50. If that Hidden Pivot support fails to brake gold's fall, look for more slippage to 1986.90, calculated by shifting the pattern's point 'A' high five bars to the left. The scumballs who manipulate gold have demonstrated that they are capable of pulling out the rug whenever they please. However, given the run-up to a new record high at 2152 just before the sniper's head-shot, it has become more difficult for them to convince us that gold needs to correct much below 2000 while it vamps for a shot at 2200 and higher. _______ UPDATE (Dec 13, 11:03 p.m.): The futures trampolined $65 from within $1 of the 1986.90 bottoming target billboarded above. Everybody happy?
Buyers impaled the 2073.00 target of the reverse pattern shown, implying the futures are on their way to at least 2152.60, the D target of a lesser pattern whose A & C coordinates are shown in the chart. Given the way bulls consolidated above the smaller pattern's midpoint pivot, the probability is high that D will be achieved with little ado. Since the futures by then will have broken free of gravity at $2,000, we should expect a relatively quick move from 2152 to 2,200, the first round number resistance above the soon-to-be-obliterated one at $2,100. _______ UPDATE (Dec 8, 11:47 a.m.): I'll bet our old friend Andy Maguire had a thing or two to say about Monday's psychopathic, whoopee cushion reversal in gold. He has noted that the pond scum who cause these takedowns have a risk cushion of as much as $90 in the arb against unlimited paper gold. Although they are obviously still able to squash gold down to $2000 practically at will, DaScumballs are going to find in increasingly difficult to fool investors into thinking gold deserves to be significantly lower than that. For now, the February contract is headed down to the 2001.50 target shown in this chart -- a good place to attempt tightly stopped bottom-fishing. Any lower would indicate 1986.90, an even better bet for bottom-fishing if it is achieved.
