I said I'd loosen up on gold if the December contract popped through three 'external' peaks, the highest of which lies at 1785.80. It very nearly succeeded, falling just 1.30 shy of my benchmark when the clock ran out on buyers Friday. However, I remain distrustful of gold's rallies nonetheless and probably would not have become less skeptical even if this rally had met my bullish criterion. Beginning with the July 21 bottom, it has been a shaky, ratcheting affair all the way up. The fact that it couldn't muster the extra inch it would have taken to surpass the small-ish peak at 1785.50 has left my mild skepticism intact. Accordingly, I've used two modest patterns to project unambitious targets. The first lies at 1788.90, just $6 above, and comes from a reverse pattern begun with a low near 1800 in early May. The second, at 1804.60, is derived from a larger rABC tracing back to a point 'a' low made in February. I'll be watching closely to see how much resistance they put up, but either can be shorted using 'camouflage', especially if you've been long on the way up.
Although there's a solid consensus in the chat room that a major bottom is in and that my 1665.00 target will not be reached, I have my doubts. They are based entirely on the decisive downside penetration of p=1773.80 on July 5. I have only very seldom seen 'p' obliterated in this way without giving way to a follow-through that hit 'D'. If gold's robust two-day rally is going to be an exception, the first evidence of this would come with an impulsive thrust exceeding three 'external peaks that lie, respectively, at 1744, 1751 and 1771. That's the kind of power rallies typically exhibit when ending bear markets. If this one can vault all three peaks with no visually significant pullbacks along the way, I'd infer it is the real deal -- at long last. (July 27 note: For the December contract, the three peaks lie at, respectively, 1763.70, 1770.80 and 1785.80.)
Finally, a bottom in sight? Judging from the chart, with its textbook rhythms and clarity, it will be hard for the August futures to avoid reaching D=1665.00 and then bouncing tradeably from this Hidden Pivot support. The downtrend has obliterated several minor supports where I'd suggested bottom-fishing, but also a major one at 1773.80, the midpoint of the C-D leg. This suggested there was urgent selling still to come, and we will likely see the last of it within $1-$2 of the target. The pattern is too obvious for traders to count on a precise turn from D, but even an imprecise one should serve for bottom-fishing with risk tightly controlled. _______ UPDATE (Jul 21, 11:15 p.m.): The futures took a trampoline bounce after swooning to 1678, but I am not ruling out the possibility of a relapse that gets closer to my 1665.00 target. Alternatively, a push exceeding 1744.30 would put bulls back in charge.
August Gold finally turned higher on the final bar of the week, a suspicious development from which some in the chat room seemed inclined nonetheless to take encouragement. My take is more skeptical, given the way sellers cracked the midpoint Hidden Pivot support at 1794.90 a week earlier. It suggested that the futures are likely to reach 'D' before they can make a good-faith attempt to end the long dirge begun from $2000 in April. Please note the small adjustment in the chart -- a shift to a higher point 'A' that has lowered the target by a few dollars to 1707.20. Note as well that a two-level rally to x=1888.70 would set up a 'mechanical' short of a kind that has worked well for us in the past. _____ UPDATE (Jul 12, 5:38 p.m.): Chat room remonstrations have sought equal time for predictions of a 1670 low before this cinder block can turn around, so here it is: a 1665.00 Hidden Pivot target. Certainly not impossible, but I will be looking for a tradeable and potentially important turn from higher levels nonetheless. Specifically, I expect the futures to bounce from 1718.30, and thence from 1707.20 if there's a relapse. If 1707.20 is exceeded on a closing basis for two consecutive days, however, or exceeded by more than $4 intraday, I would infer that 1670 is indeed going to be reached (and slightly exceeded). That would be a great place to back up the truck and buy 'em hand-over-fist.
I've been so down on gold lately that I should probably recuse myself, but here we go anyway: The trampoline rally off Friday's heavily manipulated low is likely bound for at least 1828.80, the D target of the reverse pattern shown. It is not quite a done deal because of the hesitation at p. That's why bulls should be careful if and when the move hits p2=1817.30, where a tradeable reversal could occur. Meanwhile it would take a print exceeding 1882.50 to negate the 1756.90 downside target that has been in play for nearly a month. ______ UPDATE (Jul 5, 11:20 a.m. EDT): So much for giving gold the benefit of the doubt. Today's freefall looks bound for D=1746.30, a back-up-the-truck spot for bottom fishing as far as I'm concerned. Here's the chart, with a pattern that caught a beautiful mechanical short just head of what eventually will have been a $136 selloff. _______ UPDATE (Jul 6, 8:06 p.m.): We're now working on a 1710.00 target, although the bearish forecast did not prevent our exploiting a mid-day rally worth as much as $2300 to anyone who followed my 11:43 a.m. Trading Room 'rABC' guidance. (It also went out in timely fashion to all subscribers in the form of a 'Notification'.)))))))))))))
Gold remains a study in disappointment and tedium. We've focused on a too-obvious pattern with a bearish target at 1756.90, and even shorted it on paper at 1851.20, but with no great expectation of the futures getting there. Nor are they likely to achieve the very bullish, 2082 target of a much larger pattern any time soon. If you'd prefer to trade this vehicle nonetheless, try bottom-fishing in the range 1787-1792 with a 'camouflage' set-up using a chart of five-minute degree or less. _______ UPDATE (Jul 1, 9:27 a.m.): The futures are in a presumably meaningless bounce from 1783.40. That's below my bottom-fishing range, which was tied to a p2 'secondary pivot' at 1788.30. The $6 overshoot is sufficient for us to presume that the next leg down, if and when it comes., will be an even-odds bet to reach the worst-case, 1756.90 target. Ray-rah-sis-boom-bah, Gold! You go, girl!
I'd suggested paper-trading the 'mechanical' short at 1851.10 that triggered last Thursday, but the point of the exercise was to underscore my advice that any rally not be taken too seriously. This one came off a low at 1806.10 hit on Tuesday, and the trade became theoretically profitable the next day with a so-far moderate reversal. The price target is 1756.9o, a Hidden Pivot support that can serve as a worst-case objective for the next 7-10 days. _______ UPDATE (Jun 22, 9:20 p.m.): Gold's price action can be best understood if you see it as a Bill Cosby girlfriends, unwittingly drugged and in a deep stupor.
This will come as scant consolation to long-term investors who have suffered through three months of corrective pain and tedium, but the recent low failed to generate a bearish impulse leg on the weekly chart (see inset). It could still happen, but the implication of a second try would be that bears don't have the conviction to crack 1700. Whatever happens, bullion is just a trade at the moment and nothing more, with a time horizon of perhaps 2-5 days. _______ UPDATE (Jun 13, 10:13 p.m,): Here's a fresh chart with a 1773.70 downside target that is probably the best that bulls can hope for over the near term. A rally to x=1855.30 would trip an enticing 'mechanical' short, stop 1882.60, The trade is recommended for Pivoteers who are proficient with 'camouflage' triggers, since the initial risk on four contracts would be around $12,000 theoretical. ______ UPDATE (Jun 16, 10:32 p.m.): The rally tripped the 'mechanical' short noted above, but I am still recommending the trade only to subscribers proficient with 'camouflage' set-ups.
The chart implies that I am cautiously bullish, but that's a small exaggeration. The recent dip below 1800 seems to have exhausted sellers for the time being. However, bulls, such as they are, appear to lack the energy or enthusiasm for turning things around. For starters, they would need to surpass early May's 1917.60 peak to generate a bullish impulse leg on the daily chart. In the meantime, there's no point getting excited about gold's prospects until this happens. A relapse that breaches the 1792.00 low would have very bearish implications. Alternatively, if gold shocks with a powerful rally that blows up p=1937.20, we could justifiably take an earnest interest in the 2082.30 target, which is theoretically in play because the green line has been touched.
The most bullish thing you could say about this sack of cement is that the May 16 low at 1785.00 did not quite reach its 'D' target. That's why I am returning to a big-picture pattern that is bullish, even if its 'D' target at 2075.41 greatly exceeds our expectations at the moment. A theoretical 'buy' that triggered last week implies a rally over the next 5-7 days to p=1930.20, the pattern's midpoint Hidden Pivot. We'll be better able to judge whether the move is likely to hit D once we've seen buyers interact with that number. If it is impaled on first contact or the futures close above it for two consecutive days, that would shorten the odds of a continuation to 2075. ______ UPDATE: (May 31, 10:39 p.m.): Today's funereal price action raises the question of whether the future can even reach the midpoint pivot, let alone interact with it. The theoretical buy signal is still in effect, although there is no good reason to actualize it. The good news is that gold will rally, although not too far, once we have become despairing of the possibility.
