Overnight’s break above last week’s 1.3126 high reaffirms 2017’s major base/reversal count and leaves yesterday’s 1.3002 low in its wake as the latest smaller-degree corrective low and absolute tightest risk parameter this market is required to fail below to even defer the bull, let alone threaten it. In this very short-term regard and while trying to respect some potential threats to the bull we’ll discuss below, we are defining 1.3000 as our new short-term risk parameter for a still-advised bullish policy for shorter-term traders with tighter risk profiles.
As discussed in Tue’s Technical Webcast, Jul has seen textbook 3-wave sell-off attempts that have stalled at exact 50% and 61.8% retraces of preceding rallies that are textbook examples of corrections within the broader uptrend. However, we want to respect the prospect that the continuation of this year’s 6-month rally from 21-Jun’s 1.2589 low MAY be unfolding in a rising-wedge pattern indicated by the blue lines in the 240-min chart below. It has been our observation over the decades that this pattern warns of one of two things: waning upward momentum that precedes a peak OR a “coiling up” before the trend accelerates.
The market’s admittedly short-term failure below 1.3000 would tilt the odds in favor of the former, peak/reversal count. Until such sub-1.3000 weakness is proven, it would be premature to conclude that this market isn’t only going to maintain the uptrend, but may actually start to explode higher.
With today’s break above last week’s high producing the highest levels of this year’s 6-month bull trend, quite simply the trend is up an all scales and is expected to continue and perhaps accelerate. All technical levels of merit currently only lie below the market in the form of former resistance-turned-support like the 1.3030-to-1.3050-range that capped the market from mid-May until mid-Jul’s breakout and, most importantly, corrective lows like 1.3002 and 21-Jun’s larger-degree corrective low and key risk parameter at 1.2589. While a failure below 1.3000 may be the tip of a broader peak/reversal-threat iceberg, commensurately larger-degree weakness below 21-Jun’s 1.2589 larger-degree corrective low and key risk parameter remains required to, in fact, confirm a bearish divergence in momentum of a scale sufficient to break this year’s major uptrend.
On an even broader scale, the monthly (above) and quarterly (below) log scale charts show NO levels of any technical merit shy of 1.35-to-1.40-range that supported the market for DECADES until Jun’16’s breakdown below it that left it as a new and huge resistance candidate. In the quarters or even YEARS ahead, if there is a place and technical condition to be watchful for huge resistance, it is this 1.35-to-1.40-range. We will obviously keep a keen eye on any bearish divergence in momentum from this range required to stem the clear and present uptrend and reject/define a more reliable high from which non-bearish decisions like long-covers and cautious bearish punts can only then be objectively based and managed. In lieu of such a requisite mo failure needed to stem the current uptrend, further and possibly accelerated gains remain expected.
These issues considered, a bullish policy and exposure remain advised with a failure below 1.3000 required for shorter-term traders to move to the sidelines and longer-term players to pare bullish exposure to more conservative levels. In lieu of such weakness further and possibly accelerated gains remain expected with the 1.35-to-1.40-range a very obvious major resistance candidate.