Fri afternoon’s break below the morning’s 104.35 low reaffirms the developing downtrend and leaves Fri’s 105.85 high in its wake as the latest smaller-degree corrective high and new short-term risk parameter this market is now minimally required to recoup to confirm a bullish divergence in short-term momentum, arrest the slide and expose even an interim corrective rebound, let alone threaten the broader downtrend.  Per such we’re identifying 105.85 as our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a still-advised bearish policy.

This tight but objective risk parameter at 105.85 may come in handy given:

• the developing potential for a bullish divergence in daily momentum above
• the prospect that the past few days’ portion of the decline might be the completing 5th-Wave of a textbook 5-wave Elliott sequence down from 22-Mar’s 121.15 high in the Aug contract above and
• the market’s engagement of the lower-quarter of the 2-1/2-YEAR range shown in the weekly log active-continuation chart below.

However, our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC remains at stubbornly frothy levels despite the past couple months’ meltdown that this indicator warned of that could be a sign of still further protracted losses ahead.  Herein lies the importance of corrective highs and risk parameters like 105.85 and especially 10-May’s 109.95 next larger-degree corrective high and key long-term risk parameter.  Until and unless such strength is shown, the clear and present downtrend remains intact and should not surprise by its continuance or acceleration.

Finally, by virtue of the extent and impulsiveness of the past couple month’s decline, the monthly log active-continuation chart below shows the really bearish prospect that the recovery attempt from Oct’156’s 96.10 low to 01Mar19’s 130.45 high is only a 3-wave affair as labeled.  Left unaltered by a recovery above at least 109.95 and preferably above 130.45, this labored, lateral, 3-wave recovery may be considered a corrective/consolidative affair that warns of a resumption of Nov’14 – Occt’16’s downtrend that preceded it to new lows below 96.10.  And if/when the market breaks that 96.10 low, this chart shows NO levels of any technical merit below that point shy of Jun’09’s 80.30 low.

These issues considered, a full and aggressive bearish policy remains advised with strength above at least 105.85 required to even defer, let alone threaten the bear and warrant defensive measures.  For longer-term players a recovery above 109.95 remains required to, in fact, break the 2-month downtrend and warrant neutralizing bearish exposure.  In lieu of such strength further and possibly accelerated losses remain expected straight away.