Yesterday's failure below Mon's 115.15 corrective low confirms a bearish divergence in short-term momentum that defines Tue's 116.65 high as the END of the recovery from 01-Feb's 112.75 low. Against the backdrop of a broader peak/reversal count introduced in 26-Jan's Technical Blog we believe this relapse defines that 116.65 high as the end or upper boundary of another interim correction ahead of further and possibly steep losses. The Fibonacci fact that this recovery attempt stalled in the immediate area of the (116.54) 50% retrace of Jan-Feb's 120.325 - 112.75 decline would seem to reinforce this bearish count. In this regard 116.65 is considered our new short-term risk parameter from which a bearish policy can be objectively rebased and managed by shorter-term traders with tighter risk profiles.
Contributing mightily to a peak/reversal-threat process that could be fairly major in scope are:
Indeed, it is perhaps the whopping 93% reading in our RJO BSI reflecting 119K Managed Money long positions reportable to the CFTC versus just 9K shorts that is the most compelling peak/reversal-threat evidence in the list above that could leave this market vulnerable to a steep correction of the 3-month, 23% rally in the days and weeks immediately ahead.
These issues considered, a bearish policy remains advised with strength above 116.65 required for shorter-term traders to move to the sidelines and longer-term players to pare bearish exposure to more conservative levels. In lieu of such strength further and possibly steep losses remain anticipated straight away.