Posted on Aug 08, 2023, 09:29 by Dave Toth

Today’s break below last week’s 59.09 low and key risk parameter discussed in yesterday’s Technical Webcast confirms a bearish divergence in daily momentum that could have long-term bearish implications.  As a direct result of this continued weakness, the hourly chart below shows that this market has identified Fri’s 61.72 high as the latest smaller-degree corrective high it is now minimally required to recoup to defer or threaten a more immediate bearish count and 24-Jul’s 65.58 high as THE END of at least the portion of the past couple months’ recovery from 22-Jun’s 51.36 high and, as we’ll discuss below, the possible end to a major 3-wave correction ahead of a resumption of the secular bear market.  Per such, 61.72 and 65.58 are considered our new short- and long-term parameters from which non-bullish decisions like long-covers and a new bearish policy and exposure can be objectively based and managed by shorter-term traders and longer-term commercial players, respectively.

By taking out last week’s 59.09 initial counter-trend low, the market has confirmed a bearish divergence in daily momentum (above).  This divergence marks 24-Jul’s 65.58 high as one of obvious developing importance and the prospective end to a 3-wave recovery from 31-May’s 44.47 low as labeled.  Left unaltered by a recovery above 65.58, this 3-wave recovery may be considered a corrective structure that warns of a resumption of Nov’22 – May’23’s major downtrend that preceded it to new lows below 44.47 as part of a massive, multi-quarter peak/reversal process that dates from Apr’22’s 87.65 high shown in the weekly log active-continuation chart below.  We believe this presents an extraordinary risk/reward opportunity from the bear side for longer-term commercial players.

Lastly and as we’ve discussed for many months now, not only in bean oil, but across the entire grain complex, the combination of the market’s gross failure to sustain new all-time highs last year amidst historically stratospheric sentiment/contrary opinion levels and a bearish divergence in MONTHLY momentum warns of a peak/reversal process every bit as massive as that that warned of and accompanied 2008’s major top that led to a new secular bear market.  Against this backdrop, recovery attempts, even impressive ones like May-Jul’s, still easily fall within the bounds of mere corrections within a new secular bear market count.  Today’s bearish divergence in daily momentum may be the evidence that concludes 24-Jul’s 65.58 high as the end of the latest bear market correction and start of the resumption of the secular bear market.

These issues considered, all previously recommended bullish policy has been nullified and traders are advised to move to a resumed bearish policy and exposure with a recovery above 61.72 required for shorter-term traders to move to the sidelines and subsequent strength above 65.58 for longer-term commercial players to follow suit.  In lieu of such strength, further and possibly long-term protracted losses should not surprise.

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