By David Nichols
dnichols@fractalpublishing.com

There was a mild rebound in gold on Tuesday, but certainly nothing too exciting, which is fitting for a pattern that is marking time ahead of a reversal around Day 86.

We do have some parameters shaping up to let us know when such a reversal is taking off back to the upside. The first hurdle is right at Tuesday’s high at $940, but a breakout over this level is “too easy” and won’t really tell us that this correction is fully over. Only a move back up and over $950 will give us the all-clear to pile back into a full long position.

As expected, the $931 level is turning out to be the critical energy point for the developing reversal pattern. I still think this level will ultimately prove to the turning point, but again, it will likely take 3 or 4 more trading days around these levels until gold is ready to charge higher.

Such waffling around $931 does not preclude a sudden dip down as far as $920, or even just below there. But under $927 should be a very “hot” zone for gold, with prices having trouble surviving down there for long, as upside energy comes flooding back in.

So if we get a chance to buy down around $920, we should jump on that opportunity.