Gold

The current forecast calls for more slippage over the near term to at least 1141.30, but with the dollar setting up for a correction, we should keep an open mind about gold's bullish potential. Most immediately, and assuming the 1165.40 point 'C' low of the pattern shown is not breached first [Update: It was, decisively], that would imply an upthrust to at least 1179.40.  That's a Hidden Pivot resistance, and it should exhibit very precise stopping power, since the 1172.40 mindpoint pivot with which it's associated precisely contained the last, minor upthrust. If the futures easily push past it we could take further encouragement, even if it would require an uncorrected surge exceeding 1202.80 to tip the odds decisively in favor of bulls. _______ UPDATE (9:14 a.m. EST): I overlooked this target earlier, but my trading partner, John Boutiette, pointed it out to me this morning. It is clean and compelling -- and therefore potentially important: 1137.50, which caught the low of this morning's $30 dive within 0.40.  Take a gander at the pattern on the daily chart: A=1438.30  (8/28/13); B=1185.00 (12/31/13); C=1390.80 (3/17/14).

I have lower targets outstanding, including a big-picture support at 1125.00, but the one shown at 1141.30 should be used as a minimum downside objective over the very near-term.  Traders should position from the short side until it is reached, but be aware that a rally back up to the midpoint pivot (i.e., the red line at 1198.45) would be neither unusual nor especially bullish. More likely is that it would be a bull trap -- one making gold an even more enticing short than it is from these levels. Most immediately, if you're successful catching a profitable ride south, I'd suggest using some of your gains to create a generous stop-loss for a long initiated at 1141.30, a Hidden Pivot that looks like to engender a bounced that is both precise and tradable.  What would it take to turn the short-term picture quite bullish? Answer: a print today at 1177.30

The failure of Tuesday's rally to reach the modest, 1260.30 Hidden Pivot target we were using as a minimum upside objective is not exactly a sign of robust health. The target remains theoretically viable because the point 'C' low at 1232.00 with which it is associated is still intact. However, the hourly chart has swung bearishly impulsive as a result of the ratcheting, two-day sell-off from the recent high at 1255.60.  Short-term downside potential is to the 1232.30 target shown. If this Hidden Pivot support is easily breached, however, it would suggest more sellers are waiting in the wings. Alternatively, the futures would need to surpass 1246.30 without having first touched the 1239.30 midpoint support (see inset) to turn the hourly chart short-term bullish. _______ UPDATE (October 27, 8:01 p.m. EDT): I expect the next leg down to reach the 1216.40 Hidden Pivot support shown.  Alternatively, a print today at 1236.30 would give bulls a fighting chance. _______ UPDATE (October 29, 1:23 p.m.): 1202.10 is my new downside target -- a Hidden Pivot support identified during this morning's weekly tutorial session. _______ UPDATE: An 1125.00 target broached yesterday during my regular interview with Al Korelin should suffice to keep you out of trouble. I hadn't imagined the futures would get halfway there overnight.

Friday's wallow altered gold's immediate prospects only slightly, although bulls might wish by now that those prospects, which are mildly bullish, be realized sooner rather than later. For the purpose of analysis, and to get a firm handle on Monday's odds, we'll use the small but very predictable pattern shown. If buyers' hearts are in it, they "should" be able to push this mule above the 1246.20 mipdoint pivot shown. As always, a decisive breach would tip the odds in favor of a continuation of the trend to its 'D' target -- in this case, 1260.30. ________ UPDATE (October 22, 1:50 .m. EDT): No change, although I should note that anyone who bought the pullback yesterday to the 1246.20 midpoint pivot could have made as much as $900 per contract on the scalp.

These days, it would seem that no promising impulse leg goes unpunished. Few rallies have been reaching their D targets, especially when the stock market is bounding higher. Yesterday simply continued this pattern of behavior. That said, however, and going strictly by-the-book, the bullish look of the daily chart should continue  to encourage -- at least until such time as the point C low of the pattern, 1217.60, is trashed.  Still more encouraging would be a bullish reversal that takes out the 1243.00 midpoint pivot shown. A decisive move through this level would make a further move to its D sibling at 1268.30 an odds-on bet.

Someone inquired in the chat room Sunday night whether the ongoing slide in the stock market might catalyze a melt-up in bullion, especially with stocks getting hit ahead of Monday's opening.  We needn't guess about this, since we have Hidden Pivot Analysis to provide a reliable answer.  I'd suggest using the 1242.90 target shown as a minimum upside target for now. It would be most encouraging if the December contact were to rip through that number with ease. Conversely, if the futures generate a bearish impulse leg on the hourly chart without having achieved 1242.90, that would be a bearish sign. Night owls wishing to trade the move should note that even on the hourly chart, there are some external peaks subtle enough to use for a low-risk entry attempt. ______ UPDATE (October 14, 9:27 a.m. EDT):  The last three days have produced a camouflage-y impulse leg on the daily chart. The coordinates to use for getting long are: A=1217.60 (10/10); and (so far), B=1238.60. What makes this a camo opportunity is the fact that B slightly exceeded the 9/23 external peak at 1237.00, along with an internal peak at 1234.00 recorded on 10/9.

December Gold's daily chart swung bullishly impulsive yesterday, the first time this has occurred since June. The implied power of the rally would increase significantly if the futures can now exceed the peaks labeled #3 and #4 (see inset) without an intervening b-c correction. Meanwhile, night owls can try bottom-fishing the correction from Thursday's high with a 1218.80 bid and the tightest stop you can abide.  On the 5-minute chart, the relevant pattern began with a=1230.30 at 10:40 a.m. EDT.

The futures have chomped through a midpoint resistance at 1221.80 Wednesday night and presumably are bound for its 'D' sibling at 1238.50. That would refresh the bullish impulsiveness of the hourly chart, but the implication would be still more bullish if 1238.50 fails to restrain the move for long. There are no subtle 'external' peaks immediately above that we can use for a camouflage entry, but you might try the unsubtle one at 1232.70 recorded on 9/26 to get a handhold. A bc-type pullback from just above it could offer a relatively low-risk boarding opportunity.

Bulls have been struggling for two days to achieve the 1218.00 target shown, suggesting there's not much conviction driving this so-far $30 rally.  Even so, we'll keep an open mind, especially if the futures are able to decisively exceed the target today or close above it. In this case, "decisively" means by at least 0.70, and it would imply more upside to as high as 1229.60 (240m, a=1283.30 on 10/5) over the near term. Bulls would have to do somewhat better than that, however, exceeding peaks from 9/26 (1232.70) and 9/23 (1237.00), to refresh the bullish impulsiveness of the hourly chart.