Gold

We'll focus on the small picture, since it provides better information at the moment than the big one. December Gold tripped a counterintuitive 'buy' signal on Friday when it rallied to the green line (see inset). Because the point 'c' low of the pattern fell so close to 'a', the signal should be regarded as a very good one, meaning very promising. That implies not only that the futures 'should' reach p=1269.10, but that they must reach it if bulls are to remain (much as I hate to use the word) 'hopeful'. As always, a decisive push past p would imply the D target -- in this case, 1276.50 -- is likely to be reached.

Gold's recent breach of the key low at 1259.10 low (see inset) recorded in June is worrisome, but the picture would become still moreso if a relapse in the days ahead takes the December contract beneath the 1242.70 low just to the left of it.  That would increase the imputed power of the bearish impulse leg begun from September 22's 1347.80 high. Strictly speaking, there has been no upward correction of that leg, and that's why the 1242.70 low, although it doesn't look like much, should be considered a dangerous threshold. Alternatively, the futures would need a very powerful rally -- one exceeding early September's 1357.60 peak -- to get completely out of jeopardy. However, using the subtler shadings of the 60-minute chart, we could at least take encouragement if bulls are able to push the December contract above 1270.40 in the next day or two. That's the first minor 'external' peak (from 10/7) to the left on the intraday charts, and a thrust above it would generate a promising bullish impulse leg on the hourly chart.

The gnarly pattern shown looks serviceable for the day ahead, with a 1235.10 target that looks very likely to be achieved. Keep in mind, however, that its easy breach would portend more slippage to the 1216.50 target of a larger, bearish pattern drum-rolled here earlier. The 15-minute chart has signaled a 'mechanical' short from p=1257.30, stop 1264.70, although a 'camouflage' entry is preferred due to the implied $740 of entry risk._______ UPDATE (10:39 p.m. ET): This evening's so-far timid rally would have stopped out a 'mechanical' short from 1257.30; however, it has yet to exceed even a single prior peak on the hourly chart, let alone the two we require to generate a bullish impulse leg. That would take a push above the 1270.40 high made last Thursday on the way down. Even then, the 1235.10 downside target noted above will remain valid in theory unless the 1279.40 the point 'C' high of the pattern is exceeded. If all of these things were to happen overnight and the futures were to make additional headway during the regular session, that would be highly unusual -- enough so to warrant our attention and enthusiasm._______ UPDATE (Oct 10, 9:14 p.m.): Having struggled to go lower for the last two days, the futures are positioned to turn the hourly chart bullish if they can pop above 1267.60 today.

Today's moderate weakness put the futures on course for a further decline to as low as 1216.50 over the next 2-4 days. However, using a more conservative ABC pattern (see inset) yields the possibility of a less painful outcome in the form of a bullish reversal from 1257.30, or perhaps 1235.10 if any lower. If that last number is decisively penetrated, though, the futures are unlikely to avoid falling to 1216.50. Alternatively, bulls could get back in the game with a close on Thursday above 1279.40, and they would be in good position to seize the advantage with a push by week's end exceeding 1312.90. As always, if we are to exploit low-risk entry opportunities and get a precise handle on trend strength, our focus should be on price action at midpoint Hidden Pivots -- most immediately the one at 1257.30 shown in the chart.

The Hidden Pivot support at 1279.20 shown in the chart is sufficiently clear and compelling that it should have induced at least a token bounce. The fact that it did not implies sellers are not yet through and that December Gold could test support at 1200.00 before this rather nasty correction has run its course.  Could it get worse than that, with quotes heading eventually below $1000? I seriously doubt it, but we'll be better able to assess the odds when we've seen a rally and a second leg down. If bulls are going to regain their footing, we should expect this to occur at or very near the midpoint Hidden Pivot of the follow-through leg.

Today's chart is intended to reassure you that gold means bulls no harm, even if the obvious consolidation since June bids fair to bore us to death. Notice that the futures could take out the Brexit low at 1259 and still have room on the downside, all the way to 1207, to maintain the long-term-bullish look of the chart. But it's pointless for us to begin each day fraught with anxiety about gold's all-but-inevitable blastoff  for $1400 and beyond, especially when we are unable to say what, exactly, will cause it to happen. Perhaps it will be an earth-shaking headline from the geopolitical or financial world? In any event, it is the pregnant pause that we are witnessing now, and a bullish outcome for gold should not be held in doubt.

Gold's bounce Thursday from middling overnight lows fell just shy of the 1326.30 midpoint Hidden Pivot of the pattern shown. The pattern and its HP levels remain viable nonetheless and possess the kind of clarity and vitality that will warrant exploitation. Night owls may get the first crack at it, since the futures were stealing up on an 'external' peak at 1326.00 (see inset) as we went to press. This could provide an optimal 'camouflage' set-up, so consider this a heads-up in real time. If any fills are reported in the chat room I'll establish tracking guidance Friday morning._______ UPDATE (Sep 30, 12:59 a.m. ET): The camo trade set-up sketched above worked perfectly on the 5-minute chart, with two single-bar coordinates, A and C, triggering entry at 1326.50. Half of a four-contract position would have been cashed out at p=1326.90, and a third contract at d=1327.80. The remaining contract would have an effective cost basis at that point of 1324.40. Assuming the nutty, criminally inspired takedown to 1322.00 was a real print, no reasonable stop-loss would have survived. FYI, the high of the move occurred just three ticks above the 1327.80 'secondary' Hidden Pivot of the larger pattern projecting to 1329.80. Strictly speaking, the futures became a mechanical buy at 1324.50 on their way to the takedown bottom at 1322.00. That trade would have been stopped out instantly, judging from the look of the felonious bar. Discard it as an outlier and the futures still look like they'll hit 1329.80. even so, the trade is dicey -- make that illegitimate -- because we cannot simply discard the non-conforming bar. All of this is vividly shown in the updated chart (see inset). The lesson here is that, in the trading world, you can get it just about perfect and still get

The futures seem incapable at the moment of reaching even a modest rally target at 1359.40, so we'll focus on a still-smaller corrective pattern that projects to 1317.60 (see inset). A breach of that Hidden Pivot would be mildly bearish, but even then the futures are likely to pick up support for a bounce near 1310.00, where they've bottomed a couple of times this month.  You can bottom-fish at p or d with a stop-loss as tight as four ticks, but only if you're bored out of your mind and lack the energy to find some other vehicle worth trading on Wednesday._______ UPDATE (Sep 29, 12:36 a.m. ET): Zzzzzzzzzzzz.

You don't need bachelor's degree in Hidden Pivotry to see where December Gold is headed over the very near term. The question is whether bulls will take a breather at the 1359.40 target (see inset), a minor one, or instead brush it aside. I expect at least a small pause of perhaps a day or two, judging from the way the futures have pulled back from the midpoint and secondary pivots (respectively, p and p2) the first time they encountered them. However, if 1359.40 gives way easily, that would strongly suggest that a larger, bullish pattern visible on the weekly chart has begun to assert itself. It has a 1482.90 target (!) and a key resistance (i.e., midpoint pivot) at 1394.20. (A=1207.00 on 6/3/16). A theoretical buy signal has already been tripped at 13459.60, but that is of little practical importance, since the signal came with a stop-loss of more than $2000 per contract. There will be better, far less risky ways to get aboard if December Gold is in fact on its way to 1482.90.  For now, though, let's see how buyers handle the implied resistance at 1359.40. ________ UPDATE (Sep 26, 7:12 p.m. EDT): The feebleness of buyers on Monday did nothing to alter the bullish forecast given above. A decisive push past p2=1346.90 is needed to generate a short-term finishing stroke to 1359.40.________ UPDATE (Sep 27, 10:48 a.m.): Far from pushing decisively above 1346.90, the futures are getting whacked this morning. While this hasn't altered the 1359.40 rally target, it has generated a bearish impulse leg on the hourly chart and cast a cloud over the short-term picture.  Let's see now if the c-d follow-through leg of today's a-b decline turns from the midpoint pivot, as it should if bulls are about to regain their footing.