RJO FuturesCast

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Way back in 20-Sep’s Technical Webcast we began to speculate that 08-Sep’s 1.2092 high completed a major 5-wave Elliott sequence from 03Jan17’s 1.0341 low and that a potentially extensive correction lower could span 3-to-5 months and reach levels around 1.1000 or lower. Nearly four months on and as a result of the past month-and-a-half’s return to the upper quarter of a 1.2092 – 1.1554-range, odds are growing that this correction may be more “extensive” in terms of TIME rather than (downward) price.

Indeed, the market failed to retrace even a Fibonacci minimum 38.2% of the year’s 1.0341 – 1.2092 rally and is once again pressuring the upper-quarter of the past quarter’s range. While it would be premature to conclude a “strong” Euro while 08-Sep’s 1.2092 high and key risk parameter remains intact, the extent of the recovery from 07-Nov’s 1.1554 low after such a relatively minor correction against the major uptrend indicates a “non-weakness” and resiliency that ultimately would seem consistent with our very long-term count.
Traders are reminded of our very long-term bullish count that basically concludes that the extent and impulsiveness of Jan-Sep’17’s rally breaks the major downtrend from at least May’14’s 1.3993 high and possibly the secular bear market from 2008’s 1.6040 high shown in the monthly log chart above. Huge former 1.19-to-1.21-area support from 2010 until Jan’15’s breakdown leaves this area as a key resistance candidate in general. Late-Sep’s bearish divergence in momentum specific 08-Sep’s 1.2092 high as THE high, resistance and gateway the market needs to break to reinstate the major and possibly new secular bull market.

Again and as discussed often in many of our updates since late-Sep, we anticipated a more extensive (B- or 2nd-Wave) correction lower in terms of PRICE following a 9-YEAR secular bear market in the Euro. While Sep’s 1.2092 high remains intact as a resistant cap, such a more extensive correction lower cannot be ruled out. Given such a relatively minor relapse attempt thus far and return to the upper recesses of the past quarter’s range however, such a more “extensive” correction may come in the form of a shallower but more time-consuming correction between that 1.2092 high and 07-Nov’s 1.1554 low that could still last for months ahead and that requires a break above 1.2092 to negate and reinstate the major bull.
From a much shorter-term perspective, the 240-min chart below shows the subsequent strength following 13-Dec’s bullish divergence in short-term momentum above 1.1812 that stemmed the early-Dec sell-off attempt. The market is engaging not only the 1.1941-to-1.1961-area resistance that capped the market in late-Nov/early-Dec, but also the upper-quarter of the past four months’ range that presents a slippery slope for bulls “up here”. This said, at least the intermediate-term trend is up with a failure below Tue’s 1.1846 smaller-degree corrective low and new short-term risk parameter minimally required to arrest this rally attempt and perpetuate the broader consolidative range. In effect we believe the market has identified 1.1846 and 1.2092 as the key directional triggers heading forward with former 1.1900-area resistance considered new near-term support.

These issues considered, short-term traders are OK to position from the cautious bull side from the 1.1900-area OB with a failure below 1.1846 negating this call and warranting its cover. Longer-term players remain OK to maintain a cautious bearish policy with a recovery above 1.2092 required to negate this count and warranting its cover.


Given that the Euro is by far the biggest component of the USD Index, it is no surprise that the technical construct and expectations for the Index are identical to those detailed above for the Euro, only inverted. The past couple days’ resumption of the past couple weeks’ slide leaves Tue’s 93.40 high in its wake as the latest smaller-degree corrective high and new short-term risk parameter that this market needs to recoup to jeopardize the impulsive integrity of a more immediate bearish count.
This tight but objective risk parameter may come in handy given the market’s engagement of the lower-half of the past four months’ range bounded by 08-Sep’s obviously critical 91.01 low, major support and long-term risk parameter. If the past couple weeks’ resumption of Nov’s relapse is part of the resumption of 2017’s major downtrend, then somewhere along the line it needs to not only maintain its trendy, impulsive behavior lower, but to accelerate in a more obvious manner and break 08-Sep’s 91.01 low. Its failure to do so and subsequent recovery above 93.40 will defer or threaten that bearish count and reinforce a corrective/consolidative one in which this market can remain locked within the 91.01 – 95.15-range for months more. And we will gauge this “non-bearish” count by a recovery above 93.40.

In sum, shorter-term traders are OK to establish a cautious bearish policy from the 93.00-area OB with a recovery above 93.40 required to negate this call and warrant its cover. Longer-term players remain OK to maintain a cautious bullish policy with a failure below 91.00 required to negate it, warrant its cover and reinstate a bear trend that could be major in scope thereafter.


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