The now-prompt Mar contract's gross failure to sustain mid-Nov's break below 02-Nov's 3.53 low exposes the decline from 20-Oct's 3.69 high to 14-Nov's 3.44 low as a 3-wave structure as labeled in the hourly chart below. Left unaltered by a relapse below 3.44, this 3-wave sell-off attempt is considered a corrective/consolidative affair that warns of a resumption of Sep-Oct's broader uptrend that preceded it. In this regard 3.44 is considered our new short-term risk parameter from which a resumed bullish policy for shorter-term traders can be objectively rebased and managed.
This said and especially heading into a long holiday weekend, the market's current position in the middle of the past month's quarter range between 3.69 and 3.44 presents a poor risk/reward condition from which to initiate directional exposure due to the higher odds of aimless whipsaw risk typical of such range-center environs.
From a longer-term perspective the market has yet to provide the evidence necessary to mitigate our broader BASE/reversal count introduced in 03-Oct's Technical Blog. This prospect for higher prices is predicated on the unique combination of:
We are fond of saying that fundamentals are typically most bearish at market bottoms and most bullish at market peaks while "technical" are, by definition, bullish at bottoms and bearish at peaks (although this is not to say we always read the technicals correctly). In the recent Aug-Sep-Oct period we have had the classic battle between (by most accounts) bearish fundamentals and bullish technicals.
As a result of the past week's rebound, the market has defined another corrective low at 3.44 that it is now required to break to threaten our broader bullish count as this will increase the odds of Aug-Oct's recovery attempt from 3.25 to 3.69 as a 3-wave and thus corrective structure that would re-expose Jun-Aug's major downtrend that preceded it. The Fibonacci fact that 20-Oct's 3.69 high is the exact 38.2% retrace of Jun-Aug's 4.53 - 3.25 collapse on a log scale basis would certainly reinforce such a bearish count. And basis the Mar17 contract, former 3.74-area support from early-Apr shown in the weekly log chart below has thus far played its new role well as resistance.
From an active-continuation chart perspective shown above however, the market has thus far failed to sustain losses below the 3.47-area that provided HUGE support for all of 2015 and early-2016 and should have been resistance following this summer's collapse below it. When such downtrends are broken AND market sentiment is at historically bearish levels, market's are vulnerable to larger-degree corrections or reversal higher. And as we've recently discussed, it may prove noteworthy that Aug's mere 3-cents break below Oct'14's "major" low at 3.18 is identical to Sep'09's mere 3-cent break of Dec'08's 3.05 low before the market had a reversal for the ages. And during Aug/Sep'16's bottoming process, sentiment levels were at or lower than any bearish levels since that Sep 2009 period.
These issues considered, a bullish policy and exposure remain advised for longer-term players with weakness below at least 3.44 and preferably 30-Ssep's 3.35 long-term risk parameter required to threaten or negate this call. Shorter-term traders with tighter risk profiles are advised to first approach setback attempts to the 3.52-area OB as corrective buying opportunities with protective sell-stops at 3.43 required to negate this call. In lieu of at least such sub-3.44 weakness, we anticipate an eventual break above 20-Oct's 3.69 high that could expose surprising gains thereafter.