You can use the chart to assess the strength of gold’s uptrend.
It is powerful, to be sure, but that doesn’t mean the rally couldn’t reverse sharply at any time with no warning. We’ve been using a 3533 target for the last 600 or so points, but are the odds still compelling that gold will get there? Here’s how to read the chart so that you can determine this for yourself. It shows four possible scenarios, ranked from strongest to weakest. It all began with Friday’s 57.80-point reversal off a record 3371.90. That triggered a theoretical sell signal at the green line (3314.10), the first such signal in two months. The implication is that the futures will now fall to at least 3256.30, the ‘midpoint Hidden Pivot (p), enabling at least a partial profit.
However, if the June contract doesn’t quite get there, and instead blasts off for new record highs, that would strongly imply 3533 will be reached, and quickly. A somewhat less bullish outcome (2) would be a strong bounce to new highs from the red line (p). That would follow the rule the powerful trends produce corrective ABCDs that do not reach their ‘D’ targets but instead reverse from the midpoint pivot. Alternatively, if gold penetrates the first-time sellers make contact with it, that would increase the odds that D=3140.70 will be reached. And finally, if the downtrend were to crash ‘d’, that would raise the possibility that gold has made an important high at 3371.90 and is unlikely to reach 3533. I am enthusiastically recommending this do-it-yourself exercise to anyone who is interested in learning how the Hidden Pivot Method works and to apply it to your own analysis.
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Rick Ackerman