-- Posted Sunday, 16 December 2007 | Digg This Article | Source: GoldSeek.com
Rick’s Picks
Monday, December 17, 2007
“Phenomenally accurate forecasts”
Comex Gold has been dancing at the edge of a cliff, although it’s not possible to predict quite yet whether it’s going to fall. However, the outlook for bullion could conceivably turn very ugly quickly, since, if the February contract were to dive below 780.40 this week, it would generate a robustly bearish Hidden Pivot signal on the daily chart. According to the rules of this method, such a decline would exceed three prior lows, as the chart below shows, creating a strongly bearish impulse leg in the process.
Although the negative implications would be somewhat muted if the futures were to hesitate at any one of the supports on the way down, we cannot rule out the possibility that all three supports will be breached in one fell swoop. Were that to occur, there would still be one last "fail-safe" support at 755.50 to lean on, but if it too gives way, Gold would be signaling weakness, probably, for at least the next 2-3 months.
False Signals Rare
Those of you who have been in the Rick’s Picks chat room lately will know that Comex Gold futures have moved very precisely and predictably to Hidden Pivot targets on the hourly chart. Moreover, because we have paid close attention to the formation of impulse legs on both the intraday and daily charts, we have been fooled by an intermediate-term trend change in Gold only once in the last two-and-a-half years (when we jumped the gun on a marginal and very subtle signal back in May, 2006).
By and large, the key to accurate forecasting has been to shun "billboard" predictions of spectacular rallies or declines. In that regard, since Gold was in the mid-$600s, we have been focused on a $907 target that is still valid. It would take quite a $250 washout to negate that target, but, as implied above a mere $18 decline from Friday’s settlement price could be warning of stagnant prices at best into Spring.
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