Gold

I've been having a little difficulty lately believing my blandly disinterested indicators whenever gold encourages us with a so-so rally.  Is this one for real, destined for big things, or is it just a flash-on-the-pan?  Regardless, the fact that the December contract has reversed without having quite achieved a magnetic, clear-as-day correction target at 1268.70 is undeniably bullish.  Moreover, late Wednesday night the futures were just an inch shy of vigorously refreshing the bullish impulsiveness of the hourly chart with a push above the 1296.00 'external' peak shown. Traders should view a valid B-C correction from a tick or two above that number as an excellent opportunity to get long. To keep theoretical risk down to the customary 4 or 5 ticks, I'll suggest zooming down to the 3-minute chart or less when you look for your entry signal.

Although this morning's tout for HUI sounds a despairing note, we can still give gold futures the benefit of the doubt, since they have yet to crush any compelling Hidden Pivot supports.  That could change today, however, if the December contract were to smash the 1268.70 target of the pattern shown.  That number can still be bottom-fished with a stop-loss as tight as four ticks -- or better yet via camouflage.  However, we should brace for the worst if it comes in the form of a battered 'D' correction target.

There are enough things to like about the corrective pattern shown that I can recommend bottom-fishing its 1268.70 target using a single contract and a four-tick stop-loss.  There is but one drawback arguing for a 'camouflage' approach: the existence of a structural low at 1369.00 recorded on 7/12.  However, it should pose no problem for the canny camouflageur, who can step up the size to four contracts if a perfect entry set-up forms.  Alternatively, bull trades will best be found using impulse legs on the 5-minute chart or less.  At the moment, that would require an upthrust touching 1299.80 (5-min, a=1288.80 at 11:10 p.m.)

The futures would need to push up 1376.00 to generate a bullish impulse leg on the hourly chart worth getting excited about. However, regardless of whether you're bullish or bearish, December Gold would become a very enticing 'camo' buy on a b-c pullback from just above the 1328.00 peak flagged in the chart (see inset).

Gold's bounce came from exactly where it should have yesterday (see inset), as though its handlers have been using charts to determine where to do their dark magic.  Ordinarily we would infer that any correction exceeding a p midpoint support implies more weakness ahead. In this case, however, based on recent experience, we'll assume only that it portends more tedium. Strictly speaking, it would take a dive exceeding July 17's 1269.30 low to generate the kind of bearish impulse leg worth worrying about. Alternatively, we should want to see a pop to 1340.60 by week's end to signal the bull's resurgence.

Unaccountable forces have driven a $15 push higher late Tuesday night, and although the so-far apex of the move has fallen a tad shy of the 1339.00 benchmark I'd said would generate a bullish spark, the actual high at 1338.40 was good enough to create a moderate impulse leg on the lesser charts. Since the move has yet to break above any true 'external' peaks, however, the one at 1338.90 (see chart)  remains usable for camouflage purposes. That would be especially true if the rally that exceeds it fails to clear the slightly higher peak at 1340.50 before pulling back in b-c fashion. If that is in fact what occurs, you shouldn't hesitate to seize the opportunity with a buy-stop entry.

If sellers dominate as the week begins, expect the futures to fall to the midpoint support at 1250.40, at least (see inset).  This Hidden Pivot could prove crucial to the near-term picture, since its decisive breach -- or still worse, a close below it -- would augur more downside to 1152.10.  Notice as well that this last number discounts only the lowermost of a series of point 'A' peaks; if the highest of them (1423.30) were to be used, the implied D target would be 1104.80.  Alternatively, bulls would be solidly back in command if they can muster a push above 1376.00 this week. Camouflage traders looking for an easy way to climb aboard should use peaks recorded last Wednesday, Thursday and Friday on the hourly chart for leverage. ________ UPDATE (July 30, 12: 20 a.m. EDT):  Yesterday's snoozefest did nothing to alter my forecast.  However, we can lower the bar for bulls by using a 1338.90 peak made on July 26 (60-min at 3:00 a.m.) as the number they'll need to beat to register a pulse.

The bounce from yesterday's low came from a good place -- the midpoint support of a minor corrective pattern. It was not sufficiently robust, however, to generate a bullish impulse leg on the hourly chart; that will require a modest thrust exceeding 1344.80 (peak #1) today.  Note that there are three other peaks just to the left of it, and a pullback from above any of them but the last could provide an excellent opportunity to jump aboard.

Yesterday's selloff was bearish impulsive on the hourly chart, but notice that it began from a high that had exceeded a 'look-to-the-left' peak at 1347.50. The effect was to refresh the chart's bullish energy, even if the current dynamic is a presumably short-term duel between bulls and bears. The latter cannot but reveal their strength, or lack of it, at the p midpoint of the corrective pattern shown in purple. If the larger, bullish ABC pattern is about to resume in earnest, the corrective abc should reverse from p or higher. _______ UPDATE (10:41 a.m. EDT): The futures ultimately bounced from a low at  1308.40 that was close enough to the eventual 'p' at 1309.10 to yield a picture of strength.  When corrections fail to reach their 'd' targets, as occurred here, that is always a bullish sign. Use 1387.70 for a rally target now (60m, A=1269.30 on 7/17), subject to midpoint resistance at 1348.10. A buy signal has been tripped at 1328.30, so hunting for 'camouflage' is appropriate.