Meal Obliterates Key Resistance, Reinforces Long-Term Bullish Count

February 16, 2018 1:08PM CST

This week's obliteration of the 348-to-353-range that has capped this market as resistance for the past YEAR reinforces our very long-term bullish count introduced more than seven months ago in 03Jul17's Technical Blog following an impressive bullish divergence in momentum amidst historically bearish sentiment that warned that Jun'17's 292 low completed a major correction from Jun'16's 432 high and exposed a resumption of early-2016's uptrend that preceded it. The extent and impulsiveness of this week's rally reinforces this bullish count and exposes run at and (we believe) through Jun'16's 432 high and leaves this huge and now former 350-area resistance as an equally huge new support candidate ahead of further and possibly extensive gains.

This weekly chart also shows NO levels of any technical merit between spot and Jun'16's 432 high that can be acknowledged as a resistance candidate. The ONLY levels between spot and Jun'16's 432 high are levels "derived" from previous data points. And traders are reminded that such merely derived levels like Bollinger Bands, Imokus, channel lines, the ever-useless moving averages and even the vaunted Fibonacci relationships we cite often never have proven to be reliable reasons to expect resistance (or support) without an accompanying bearish divergence in momentum. And they never will.

The only levels of any technical pertinent currently as a result of this week's bust out are former resistance-turned-support like the 350-area and prior corrective lows we'll specify below.
The monthly log scale chart below shows this month's confirmation of the major, multi-year base/reversal environment similar to those that followed the Dec'08 and Nov'04 lows circled in blue. Further long-term gains are expected as a result with a failure below 05-Feb's 326.4 larger-degree corrective low minimally required to threaten this call.
The daily chart above and hourly chart below detail the current uptrend from 12-Jan's 310.3 low following 17-Jan's bullish divergence in momentum discussed in that day's Technical Webcast. "Breakaway gaps" characterize a very strong, 3rd-wave-type rally in which further, extensive gains remain expected. Perhaps most importantly, these charts also recent smaller- and larger-degree corrective lows at 359.9 and 326.4 that the market is now required to fail below to defer or threaten a bullish count. In this regard these levels now serve as our new short- and longer-term parameters from which the risk of a still-advised bullish policy and exposure can be objectively rebased and managed.

In sum, a full and aggressive bullish policy and exposure remain advised with a failure below 359.9 required for shorter-term traders to take defensive action and commensurately larger-degree weakness below 326 for long-term players to do the same. In lieu of such weakness we anticipate further and possibly accelerated gains to and eventually through Jun'16's 432 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.