Gold

The chart shown puts the $17 decline from the recent high in perspective. Although it has turned the hourly chart bearishly impulsive, this poses no threat to the six-week-old consolidation begun following the Brexit spike. Gold is simply biding its time until conditions are favorable for a follow-through to the 1424.60 target shown. In the meantime, we can fine-tune our assessment of the current weakness by monitoring any interaction with the 1352.10 target of the abc downtrend at the rightmost edge of the chart. If this minor Hidden Pivot support is touched, it would re-energize sellers by exceeding an external low at 1353.70. It would also put the green line at 1342.20 in play as a place to get long 'mechanically,' so you should stay tuned to that chat room for further guidance if and when that occurs.

August Gold pulled back Thursday after rallying marginally above the regular-session high, but not  before it had exceeded some 'external' peaks recorded in mid-July. This should serve to refresh the bullish energy of the intraday charts. It also increased the odds that the move off recent lows around 1310 is the booster stage of a moon shot to the 1418.00 target shown. That target will be in-the-bag, as far as I'm concerned, if and when buyers push this vehicle above the pattern's 'midpoint Hidden Pivot' at 1363.10. More immediately, a thrust on Friday exceeding the 1341.30 midpoint pivot of the smaller pattern at the rightmost edge of the chart would be the first strong sign that bulls have bigger things in mind. (Note: I'll transition shortly to the December contract. For your information, the corresponding Hidden Pivot levels in the hourly chart shown are as follows: p=1369.70; p2=1397.20; and D=1424.60.)

Fueled by idle threats from the Fed, gold futures launched sharply higher from well above the 1306.00 pivot where we'd hoped to do some bottom-fishing. The rally exceeded no fewer than four peaks on the 120-minute chart, two of them 'external', so bulls will have the bad guys on the run as we head into week's end. They could flatten bears with a further push above 1348.00 (see inset) on Thursday, but night owls needn't wait to get long, since the shallow pullback from the intraday high is close to generating a tradable pattern that I've sketched hypothetically for your guidance.  I've also illustrated a larger, bullish pattern that show there's potential over the near term to 1418.00.

Because Wednesday's FOMC meeting announcement is unlikely to add anything new to current perceptions that the Fed 'might' tighten by September -- yeah, sure -- we might expect gold's tightly impacted downtrend to continue, perhaps with an exaggerated feint lower when the ostensible 'news' hits the tape. If this is the way things play out, we can use the 1296.70 Hidden Pivot shown as a worst-case downside target for the near term.  Regardless, the secondary pivot at 1306.00 is so well placed that I'll recommend bottom-fishing there with a 1306.10 bid and a stop-loss as tight as three ticks. Traders familiar with the 'camouflage' entry technique can try to improve their odds by looking for a reversal from near p2 on charts of three-minute degree or less.

Today's turnaround left the post-Brexit rally, with a 1413.90 target (see inset), intact. The futures are still not out of the woods, however, since the rally has yet to surpass any 'external' peaks on the 30-minute chart. That would require a push -- and the sooner the better -- above peak #1; or for good measure, above #2. Once the latter is exceeded, a further rally to 1361.10, the midpoint Hidden Pivot resistance, would become an odds-on bet. A decisive breach to the upside of that number would affirm the likelihood of a finishing stroke to 1413.90 while also making p and p2 potentially useful for 'mechanical' entries on the way up. ______ UPDATE (July 23, 12:35 p.m. EDT): Friday's price action, although disappointing, did not alter the analysis given above. ________ UPDATE (July 25, 7:03 p.m.): Yet another suffocatingly boring day changed nothing in the short-term picture. The futures oscillated in a tight range, holding just above a key support at 1308.20 that is shown in the chart. If it's breached, a 1296.70 target would be in play (30-minute, a=1348.00 on 7/13); or, worst case, 1282.90.

As we went to press, the futures were within four ticks of the 1312.10 retracement target sent out to subscribers Tuesday night. Will this Hidden Pivot support hold? Even if it does, we'd still need to see a rally surpassing last Friday's 1339.60 peak before we could infer that correction begun from $1377 on July 6 has run its course. Alternatively, just a little more downside exceeding the 1308.10 low (see inset) would negate the large bullish pattern shown. If this happens and the futures grind lower for yet another day or two, use the small downtrend at the right-hand edge of the chart, with a 1295.50 target, to guide you. My worst case over the near term would be 1282.90, a Hidden Pivot support whose provenance is also shown in the chart.

The excruciating tedium of the last three days has left the futures in an unconvincing downtrend that targets 1319.00, or perhaps 1312.20 if any lower.  If there's a buying opportunity just ahead, it could be pursued with a tightly stopped bid in either place. Otherwise, I'd suggest waiting for a pullback from just above the tiny 'look-to-the-left' peak at 1340.60 labeled #1, since that could set up a 'camouflage' entry on the lesser charts with initial risk very tightly controlled.

Although a rally target at 1416.70 remains outstanding, last week's moderate selloff warrants caution because it came from a top that fell within $5 of the 1382.80 target shown. It also completed an ABC pattern that has taken six months to play out. A correction of at least two to three weeks' duration would be normal under the circumstances, but that will vary according to how much power is pushing this possible baby bull. In any case, if the futures were to close above 1382.80 by next Friday (or so), that would imply buyers are raring to go, all but guaranteeing a further push to 1416.70 and beyond. _______ UPDATE (July 18, 7:56 p.m. EDT): Minor weakness, if it occurs, could push this vehicle down to 1311.90, where it would become a presumptive buying opportunity, stop 1311.30.  On the hourly chart, here's the pattern: a=1348.00 (7/13); b= 1320.40 (7/14); c=1339.50.

The minor Hidden pivot support at 1335.90 where I'd suggested bottom-fishing last night evinced no support whatsoever, stopping out traders who followed my guidance exactly with a loss of $70 per contract. The easy penetration of the support telegraphed the weakness that was to follow. It may also have made traders skittish about trying to catch the eventual low at 1320.40 and the so-far $17 bounce that has ensued. All of this occurred within the context of a bullish pattern projecting to 1416.70 that on Tuesday tripped a 'mechanical' buy signal at 1335.30, stop 1308.10. The initial risk of $2700 per contract made this trade too risky to advise, but the signal itself still holds analytical value, since the somewhat subjective idea behind mechanical trades is that they be initiated only on patterns that look like shoe-ins to reach their D targets. That looked to be the case two weeks ago, when August Gold spiked impulsively in response to the Brexit vote.  But the consolidation since then, assuming it is a consolidation, has been flaccid and disappointing -- so much so that I can advise long entries tonight only if you are able to use camouflage to get aboard. The four-minute chart has plenty of handholds for this purpose if you're interested.