RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The 240-min chart above and daily chart below shows this week’s continued plunge following Tue’s break below 13-May’s 1.0361 low that not only reaffirms and reinstates the secular bear market from 2008, but also produces the lowest euro rates since 2002.  Yesterday and overnight’s continued slide leaves yesterday’s 1.0273 high in its wake as a smaller-degree corrective high that can serve as a mini bear risk parameter for very short-term traders.  But even if this market confirms a bullish divergence in short-term momentum above 1.0273, it would be of waaaaay too minor a scale to conclude anything more than another interim corrective hiccup within this monster bear.

MINIMALLY, proof of strength above former 1.0428 support-turned-resistance is required to even defer, let alone threaten a bearish count.  Per such, we’re trailing our short-term bear risk level to 1.0428.  From a scale pertinent enough to truly threaten the secular bear trend, commensurately larger-degree strength above 30-May’s 1.0794 larger-degree corrective high remains required.

The weekly (above) and monthly (below) log scale charts show the sheer enormity of this secular bear market from 2008’s 1.5988 high in the contract.  The trend remains down on all scales and should not surprise by its continuance or acceleration.  Frankly, we’re surprised that our RJO Bullish Sentiment Index of the hot Managed Money community is somewhat benign at 43%, suggesting these traders are cool to the idea of chasing bearish exposure “down here”.  Perhaps the secular bear will continue until they relent and admit and sell the proverbial lows.

On an even broader quarterly log scale basis of the underlying cash euro market, the chart below shows the euro trading at its lowest rates since 2002.  Moreover, there are NO levels of any technical merit to hold it up shy of 2000’s 0.8228 low.  This doesn’t mean we’re forecasting a move to an 0.82-handle.  But it certainly does mean that until and unless this market recoups levels above our risk parameters at 1.0428 and especially 1.0794, the market’s downside potential is indeterminable and potentially extreme, including a run at 0.82 or below.

In sum, a bearish policy and exposure remain advised with a recovery above 1.0428 required to shorter-term traders to move to the sidelines and commensurately larger-degree strength above 1.0794 for longer-term institutional players to follow suit.  In lieu of such strength, further and possibly accelerated losses remain expected.

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