Gold

The futures rallied as anticipated, hitting 1123.70 intraday to set the stage for a presumptive follow-through on Thursday.  The big-picture target at 1143.00 still obtains, although I'm going to adjust it downward slightly, to 1141.90. Traders can use the smaller pattern shown, with commensurately less entry risk, to initiate 'mechanical' trades on the way up. You should attempt this only if you're familiar with the rules governing the strategy, but don't hesitate to query me in the chat room if I'm there when the futures punch through p or p2.  Please note that a fall overnight beneath 1118.20, the point 'C' of the pattern, would invalidate the mechanical-trade levels although not the 1141.90 minimum objective. ______ UPDATE (9:55 p.m. EDT): Just a small thrust above yesterday's 1136.00 high and the December futures will hit the 1143.00 target noted above. (I've re-readjusted it. My eyes seem to be playing tricks on me.)  This midpoint Hidden Pivot remains my minimum price objective for the near term, but as I've tried to make clear, buyers will need to blow past it to demonstrate the moxie to continue on up to the 1188.30 'D' target with which it is associated.

Sellers have struggled for the last week to push the futures lower, suggesting bulls are gearing to turn things around. If so, we should see a push today or tomorrow to the green line at 1120.40, where a theoretical 'buy' signal would be tripped. After that, the sooner the rally pushes past the midpoint pivot at 1143.00, the more bullish the implication. A 'mechanical' buy after p has been decisively exceeded may be possible, so stay tuned to the chat room if you're interested. More immediately, night owls could look for 'camouflage' entry opportunities on the five-minute chart or less.

Although I remain willing to give gold's rallies the benefit of the doubt, the one shown is about as dubious as they come. It was literally in the final seconds of the trading week that the futures shot above a technically significant 'external' peak at 1108.00, generating a minor bullish impulse leg. It is plausible, at least theoretically, to infer that this is prelude to a move to as high as 1186.40, the D target of a pattern begun on the daily chart on August 4 from 1080.20. However, we'll let bulls prove their case one small step at a time, which in this instance would call for the completion of the minor (and still unformed) ABC pattern shown at the rightmost edge of the chart. The pattern, subtle as it is, may afford night owls a chance to get aboard using 'camouflage' Sunday night, assuming the rally continues.

Yesterday's rally was strong enough to stop us out of a short position I'd advised overnight, but I doubt there's sufficient buying power for a strong follow-through. Even so, traders could bottom-fish with theoretical risk under very tight control using the chart shown. All three Hidden Pivot supports -- p, p2 and D -- occur in places where competition from other bidders is likely to be light. Accordingly, you should place your bid a tick above each, using a stop-loss as tight as 3-4 ticks. This implies that you'll need a favorable move of at least 9-12 ticks before taking a profit on a multi-contract position, or before implementing a trailing stop for a single lot. _______ UPDATE (9:25 a.m.): The breach of 1101.80 just now portends more slippage to 1095.60 -- or perhaps 1094.50, the end of the trail, short-term, for the hourly chart.

December Gold was a 'mechanical' short from 1107.70 early Thursday morning, stop 1112.10. Minimum price objective thereafter: 1094.50. That target was flagged here yesterday as a worst-case for the near term, but it became an enticing bet after the futures crushed the p2 pivot shortly after noon. If you already initiated the short, a partial profit was in order, since the futures subsequently fell to 1102.50. What would it take to turn this picture short-term bullish? Answer: a pop today or tomorrow exceeding the 1126.00 high that I've labeled.  Whatever the case, 1094.50 can be bottom-fished with a tight stop -- more aggressively if you've been short for the ride to it.

Several precise bounces from the midpoint pivot (1120.50) have confirmed the bearish pattern shown. Sellers seem to be struggling to push the futures lower, but the pivot has already been breached by enough to imply that 1107.40 will be reached, or perhaps 1094.30 if any lower. On the hourly chart, the October contract has just missed tripping a 'mechanical' short from 1120.50, but should this occur, the stop-loss would be at 1125.00. Alternatively, a rally exceeding 1132.90 would turn the hourly chart mildly bullish and possibly set up a low-risk 'camo' buy on a shallow pullback from just above that number.

Yesterday's rally got to within an inch of the target I'd provided, but it would have been more encouraging if the target had been exceeded. Still, the bullish look of the pattern is intact, and the futures could still reach 1178.20 to complete the minor cycle if they can get past the 1147.60 midpoint pivot by no later than Thursday. Traders familiar with the technique can get long 'mechanically' on a pullback to 1147.60 once this Hidden Pivot has been exceeded by at least $4. (I've sketched this hypothetically.. The immediate goal thereafter would be p2=1162.90, implying an 1142.50 stop-loss at the time the trade is initiated. ______ UPDATE (September 3, 12:33 a.m.):  Wednesday's moderate weakness did not alter my analysis or recommendations. However, if the futures are going to reverse the slide and 'actualize' my numbers, the turn will need to come either from p=1129.50, or D=1127.10 of the minor downtrend begun from a=1140.90 (30-minute, noon EDT). _______ UPDATE (9:38 a.m.): The futures just bottomed almost exactly at the 1120.70 D target of this pattern on 15-minute: A=1147.30 on 9/1; B=1131.20 yesterday; C=1136.80 yesterday. Your clue ahead of the weakness was that a mechanical 'buy' today at at 1128.70 (8:30 a.m.) would have gotten pulped. If we are going to continue to give bullion the benefit of the doubt, we'll need to use, on the hourly chart, A=1081.40 from 8/7. This is the starting point of the last unsullied bullish pattern on the intraday charts.

December Gold was maintaining altitude early Monday morning, borne aloft by a fearsome selloff in Asian markets. The easy push through a midpoint resistance at 1136.70 (see inset) implies that the rally will continue to at least 1148.30, the D target of the pattern.  A 'mechanical' buy could be attempted on a pullback to 1136.70, stop 1132.80, but I'd suggest keeping contract size to a single unit. The same tactic could also be used at p2 following a decisive push past it, but you should attempt this only if you're thoroughly familiar with the rudiments of the mechanical trade.

The bullish pattern shown is gnarly but delicate, since it wouldn't take much selling to invalidate it. The good news is that if it survives and the futures rally past the 1139.30 midpoint resistance without first dipping beneath the point C low at 1129.50, the resulting pattern would sufficiently energized to reach the 1149.00 target without difficulty. Of course, a decisive move past it would suggest buyers have more ambitious goals in mind, and perhaps enough energy to promote a rally that lasts more than a day or two. _______ UPDATE (1:08 a.m.): A slightly lower low has not killed gold's odds of rallying, just altered the numbers slightly. Now, it'll take a pop above p=1138.40 to build up some steam. Thereupon, the D target to beat would be 1148.10.