The market’s failure to sustain early-Jun’s recovery above 08-Jun’s 30915 low and key bull risk parameter discussed in 14-Jun’s Technical Blog nullifies last week’s bullish divergence in momentum, chalks up mid-May-to-mid-Jun’s merely lateral recovery attempt as a corrective/consolidative affair and reinstates the major bear trend.  The 240-min chart below details the past week’s trendy, impulsive relapse that leaves smaller- and larger-degree corrective highs in its wake at 33230 and 41335, respectively, that now serve as our new short- and long-term risk parameters from which a resumed bearish policy can be objectively rebased and managed.

The daily log scale chart of the contract above and of the underlying Bitcoin Real Time Index below show the breaks below 08-Jun’s respective lows that nullify mid-Jun’s bullish divergences in momentum, confirm those rebounds as (possibly 4th-Wave) corrective and reinstates the major downtrends.  Those mid-Jun highs at 41335 and 40170 are clearly the latest key corrective highs and risk parameters that the contract and Index must recoup to break the resumed clear and present downtrend.  Until and unless such strength is proven and with virtually no levels of any technical merit below the market to look to as prospective support, the market’s downside potential is once again indeterminable and potentially extreme.

The weekly log chart of the contract below shows today’s resumption of the major reversal from 14-Apr’s 65520 all-time high.  Relative to the magnitude of Mar’20 – Apr’21’s massive 4210 – 65520 rally, the two-month swoon could still be within just a major bull market correction as, indeed, it has yet to retrace even a Fibonacci minimum 38.2% of the past year’s rally at 22961.  But given today’s resumption of the past couple months’ downtrend and until stemmed by a bullish divergence in momentum by a recovery above 41335, there’s no way whatsoever to know whether this two-month, 55% (thus far) decline is “just” a correction or a major reversal lower where multi-quarter weakness to huge former 2019-to-2020 resistance between 13915 and 10670 might hold as support.

These issues considered, a resumed bearish policy is advised from former support-turned-suspected-resistance around the 30000-handle-area with a recovery above at least 33230 required to defer or threaten this call and warrant a return to the sidelines.  Commensurately larger-degree strength above 41335 however is required to end the two-month collapse from 65520 and expose a larger-degree (B- or 2nd-Wave) corrective rebuttal.  In lieu of such strength, further and possibly protracted, multi-month losses straight away should not surprise.

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.