S-T Failure Resurrects Longer-Term Euro Correction, USD Index Recovery

December 7, 2017 8:27AM CST


The market's relapse this week below 30-Nov's 1.1809 initial counter-trend low confirms at least the intermediate-term trend as down and leaves 01-Dec's 1.1941 high in its wake as the latest smaller-degree corrective high it's now minimally required to recoup to arrest the slide from 27-Nov's 1.1961 high, render it a 3-wave and thus corrective affair and re-expose Nov's rally. In this regard 1.1941 becomes our new short-term risk parameter from which non-bullish decisions like long-covers and bearish punts can be objectively based and managed.
While seemingly nondescript, this week's shorter-term weakness could have longer-term implications, including the resumption of what we believe has been and remains a major, multi-month correction lower from 08-Sep's 1.2092 high shown in the daily log scale chart above and weekly log chart below. The short-term mo failure discussed above stems from the upper-quarter of the past couple months' range that comes on the heels of:

• late-Sep's bearish divergence in momentum that exposes
• 08-Sep's 1.2092 high as the END of a major 5-wave Elliott sequence from 03-Jan's 1.0341 amidst
• historically frothy bullish sentiment not seen in over three years.

consistent with our longer-term bearish/correction count introduced in 20-Sep's Technical Webcast. Left unaltered by a recovery above at least 1.1941, the recovery attempt from 07-Nov's 1.1554 low to 27-Nov's 1.1961 high is arguably the B- or 2nd-Wave correction within a broader peak/reversal process that warns of further major correction lower that could still span weeks and, we suspect, to the 1.14-to-1.10-range.
Contributing to this count if massive former support from the 1.19-to-1.21-range on a monthly log scale basis below that, since broken in Jan'15, now serves as a major new resistance candidate. Thus far, as a result of the bullet points above, the market has acknowledged this key resistance. And until the market recoups at least 08-Sep's 1.2092 high and our key long-term risk parameter, the odds of a larger-degree correction of 2017's major bull remain intact.
These issues considered, a bearish policy remains advised for long-term players with strength above 1.2092 required to negate this call and warrant its cover. Shorter-term traders who stepped aside from a bearish policy following 14-Nov's bullish divergence in shorter-term momentum are advised to return to a bearish policy and exposure from 1.1810 OB with strength above 1.1941 required to negate this call and warrant its cover. A run at and eventually below 07-Nov's 1.1554 low is anticipated.


Yesterday's recovery above 30-Nov's 93.51 initial counter-trend high presents an identical, only inverted technical construct to that detailed above in EURUSD with a failure below 01-Dec's 92.60 low and short-term risk parameter minimally required to threaten this call.
In lieu of such sub-92.60 weakness we anticipate a resumption of what we believe is a major correction of 2017's entire 103.82 - 91.01 5-wave decline shown in the daily (above) and weekly (below) charts that could still span months and reach levels in the 96-to-99-range or higher. In sum, a bullish policy remains advised for longer-term players with a failure below at least 92.60 and preferably 91.01 required to threaten and then negate this call. Shorter-term traders are advised to return to a cautious bullish policy from 93.50 OB with a failure below 92.60 required to negate this call and warrant its cover. In lieu of such weakness we anticipate a run at and eventually through 07-Nov's 95.15 high


RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.