Gold

Gold futures have made no headway since early July, when the December contract came within a hair of a 1385.80 target that had taken six months to reach (see chart-in-chart inset). The correction has been relatively shallow so far, and that's encouraging. However, the bigger picture shows that this latest phase of the 2016 bull just missed 'impulsing' past an imposing peak at 1392.60 recorded in March 2014. Such timidity should temper our expectations at the moment for an explosive breakout. More likely in my estimation would be some backing and filling of the 172-point gain achieved since early June.  I'm not ruling out a big move over the next few weeks, and it would have powerfully bullish implications if it were to exceed the 1432.90 peak (an approximation, since this is a continuous chart) achieved in August 2013 without a significant pullback on the weekly chart. Most immediately, Friday's slide left me with no strong bias, only a mild interest in this set-up taking shape on the hourly chart for a possible 'counterintuitive' buy Sunday night or Monday: A=1336.70 (7/29 at 5:00 a.m., EDT): B=1374.20; and C=?. _______ UPDATE (August 8, 6:44 p.m. EDT): Monday's slight weakness negated the trade I'd suggested, but here's another pattern from the hourly chart that could evolve overnight into a 'counterintuitive' buying opportunity: A=1328.30 (7/27); B=1374.20 (8/2); and C=won't exist until a buy signal is tripped via an 11.50 point rally from a low occurring between 1329.00 and 1331.00.

The futures reversed sharply without having reached the 1352.10 correction target noted in my last tout. The rally created an impulse leg on the hourly chart that is sufficiently robust to justify using the bullish pattern shown. This implies that a pullback to the green line (1364.50) would trip a 'mechanical' buy signal, stop 1355.00. If the nearly $1000 initial risk seems too rich, consider using a 'camouflage' entry as an alternative.  Incidentally, perhaps the best way to have gotten aboard the rally Thursday morning was by way of a 'counterintuitive' entry with a buy-stop at 1360.20, the trigger price of the small red ABC pattern shown. ______ UPDATE (August 5, 19:21 a.m. EDT): This morning's knee-jerk reaction to 'bullish' payroll data has destroyed the bullish pattern noted above. Now let's see if a new one is formed with a point C low above the original A. If it is just above it, that could set up a 'counterintuitive' buying opportunity.  Currently, on the three-minute chart, the futures were a 'mechanical' short at p=1347.60, bound for d=1337.30 (where a=1366.60 at 8:27 a.m.) They'll have a chance to bounce from p2=1342.50 momentarily.

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.