Gold Needs More Time to Dither

By Rick Ackerman, GoldSeek

We’ve never been gung-ho about head-and-shoulder patterns, mainly because they seem to pop up everywhere you look for them. Even so, there’s something to be said for the elegant simplicity of the two head-and-shoulder formations show in the charts below. The top chart is a bearish pattern in Comex August Gold that has been gestating for nearly a month. Its mirror image, shown in the Dollar Index chart below it, is a bullish, reverse head-and-shoulders that has been taking shape over the same period. If both patterns were to play out in textbook fashion, gold futures are about to take a spill, and the dollar to rise commensurately, within the next few days.

Textbook patterns aside, evidence has been accumulating in recent weeks that gold is not quite ready yet to blow past $1000 once and for all. Our target for the August Comex contract, currently trading near $960, has been $1066; however, on the intraday charts, every time buyers take a running start at the Promised Land, the rally loses steam before it can surpass the two prior peaks that Hidden Pivot analysis requires to signal an impulsive move. And even when the requirement is met on the very lesser charts – say, the 1- or 3-minute bars — it is invariably matched by a move of equal magnitude in the opposite direction. We refer to this dynamic as “dueling impulse legs,” and it suggests that traders are locked in a dither.

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