Posted on Mar 23, 2023, 12:54 by Dave Toth
Way back in 16Nov22’s Technical Blog following that day’s bearish divergence in momentum amidst a confluence of other peak/reversal-threat factors, we discussed the developing prospect that 11-Nov’s 75.94 high in the then-prompt Jan contract and 71.52 in the now-prompt May contract completed a major 3-wave and thus corrective structure up from last summer’s low(s) that warned of a resumption of Jun-Jul’22’s downtrend that preceded it. Today’s decisive, impulsive break below 14Jul22’s 53.92 low finally confirms this long-term bearish count and major reversal of 2020 – 2022’s secular bull trend.
On a relatively shorter-term basis, the extent and impulsiveness of this week’s continued and arguably accelerating decline suggests that the portion of the bear from 27-Dec’s 66.14 high is an “extending” 3rd-Wave that warns of steep, even relentless losses straight away. To threaten this count, a recovery above Mon’s 58.39 corrective high is now minimally required. Per such, we’re defining 58.39 as our new key parameter from which both short- and long-term commercial traders can objectively rebase and manage the risk of a still-advised bearish policy and exposure.
Former 55.00-area support is considered new near-term resistance.
On a much longer-term scale, the weekly log chart above shows not only this week’s break below last Jul’s 53.92 low to the lowest prices since Dec’21, but also an outside WEEK down” (higher high, lower low and probable lower close than last week’s range and close) that punctuates this latest spate of weakness. Moreover, by breaking last Jul’s 54.42 initial counter-trend low on a monthly log active-continuation basis below, the market has confirmed a bearish divergence in MONTHLY momentum. On the heels of a topping process that dates from last Jun’s 87.65 high, this week’s decline confirms the end of the 2022 – 2022’s secular bull market and continuation of a new secular bear market in bean oil prices. And given the extent and uninterrupted nature of Nov’20-to-Jun’21’s explosive uptrend that left NO former consolidative battlegrounds that might now be looked to as support candidates, the market’s downside potential is wide open and should not be underestimated. Sustained losses could easily span months or even quarters.
These issues considered, a bearish policy and exposure remain advised with a recovery above 58.39 minimally required to defer or threaten this call to the point of non-bearish action like short-covers. In lieu of such strength, further and possibly accelerated, prolonged losses are expected.