Gold

Three weeks of trying, sort of, have failed to push this brick above the modest 'external' peak at 1279.40 shown in the chart. It would be premature for us to give up, especially since a mere $9 upthrust from current levels would do the job. That would turn the hourly chart bullish, but we'll wait for it to happen before we breathe a sigh of relief. Not a big sigh, though, since the daily chart still looks menacing and provides ample reason to fear a drop of as much as $104 points at any time. Alternatively, it would take a print at 1287.60 to trip a theoretical buy signal on the 'daily'. _______ UPDATE (Oct 30, 10:16 p.m. ET): Friday's encouraging leap fell $2.20 shy of our 1287.60 benchmark, but it left the futures in good position to achieve the 1289.10 target shown -- and then some.  If the rally pushes easily past that Hidden Pivot, it would be bullish, but the December contract would then need to rally a further $42.60, topping an 1331.50 'external' peak from 9/30, to generate a fresh bullish impulse leg on the hourly chart. _______ UPDATE (Oct 31, 9:16 p.m.): Today's dipsy-doodle generated a mechanical 'buy' signal at 1274.60, stop 1269.70. Let's see now whether bulls can score from the three-yard line.

Just when you think you've got gold figured out, it pops a wheelie in the opening hour and zooms higher at a time of day when bullion rallies seldom occur. The move left the futures just shy of the 1278.80 target shown, but if buyers take out this Hidden Pivot resistance as I expect, look for the move to hit 1284.80. That target can be calculated by simply sliding the point 'a' low down to 1251.20, where the December contract bottomed on October 17 to commence a four-day rally. _______ UPDATE (Oct 26, 7:04 p.m.): Buyers stalled a whisker shy of the 1278.80 target, then spent the remainder of the session in relapse. The short-term picture remains bullish nonetheless, going back to a rally begun on October 14 from 1246.90, but it would turn bearish with a print below 1257.20. It is not a healthy sign that the futures were unable to achieve 1278.80.

No, you're not imagining it: The futures hit their intraday high nearly every day on the opening bar, then it's all downhill from there.  Sucker bait. How many times can bulls fall for the same, obvious trap? Till the end of time, probably. If you want to end run this little shell game and feel it necessary to trade from the buy side, try it at the midpoint pivot shown with a very tight stop-loss. The impulse leg looks appealing enough that you can still attempt bottom-fishing in this way if a new point 'C' is generated above the current one at 1266.00 (but no higher than 1268.00).

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.