Corn Reaffirms Major Bullish Count, Identifies New Risk Levels

May 24, 2018 9:00AM CDT

Yesterday and overnight's break above 03-May's 4.08 high reaffirms our long-term base/reversal count introduced in 30-Jan's Technical Blog and leaves smaller- and larger-degree corrective lows in its wake at 4.01 and 3.95, respectively, that this market is now required to fail below to threaten or negate this call. Per such these levels serve as our new short- and longer-term risk parameters from which a still-advised bullish policy and exposure can be objectively rebased and managed commensurate with one's personal risk profile.
Corn Jul '18 60min Chart
Corn Jul '18 Daily Chart
The trend is up on all scales and should not surprise by its continuance or acceleration. The market's engagement of the upper-quarter of the 3-1/2-YEAR range amidst historically frothy levels in our RJO Bullish Sentiment Index remain in place as threats to the bull, but these factors will only become APPLICABLE if/when the market breaks the clear and present uptrend with a confirmed bearish divergence in momentum. Herein lies the importance of identifying those specific and objective risk parameters at 4.01 (for shorter-term traders) and 3.95 (for commercials). In lieu of weakness below these levels, there is no way to know that this rally is THE major 3rd-Wave rally that will launch this market to levels above the past THREE YEARS' highs ranging from 4.17 to 4.54 in accordance with our multi-year base/reversal count.
Corn Weekly Chart
Corn Monthly Chart
The monthly (above) and quarterly (below) log scale charts show the (circled) base/reversal behavior and environment we've discussed since 14Oct2016's bullish divergence in weekly momentum left 31Aug16's 3.15 low in its wake as the end of the secular bear market and start of a major base/reversal count. While the market remains within the past 3-1/2-year range that could continue to constrain it for another growing season or two, the market has yet to provide any evidence to counter our contention that that 3.15 low completed the secular bear trend from 2012's 8.49 all-time high and that a major correction or reversal of the 4-year, 63% decline is in progress and will eventually produce levels potentially well above Jul'17's 4.17 initial counter-trend high and even Jul'15's 4.54 high. The past week's resumption of what has become a 6-MONTH bull trend could easily be THAT rally that launches to 4.50+ levels straight away. And we've identified exactly where the market has to fail below to threaten or negate this specific call: below 4.01 and then 3.95.

These issues considered, a full and aggressive bullish policy and exposure remain advised with a failure below 4.01 required for shorter-term traders to step aside and commensurately larger-degree weakness below 3.95 for longer-term players to take similar defensive action. In lieu of such weakness further and possibly accelerated gains should not surprise.

Corn Quarterly Chart

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