Posted on Jul 25, 2022, 09:16 by Dave Toth
DEC CHI WHEAT
Fri’s relapse below 15-Jul’s 7.84 low and short-term risk parameter nullified our pure risk/reward bullish punt recommended in 20-Jul’s Trading Strategies Blog and reinstated and reaffirmed our major peak/reversal count. The resulting important by-products of this resumed weakness is the market’s definition of smaller- and larger-degree corrective highs at 8.49 and 9.20 that this market is now required to recoup to threaten and then break May-Jul’s downtrend. Per such, these levels serve as our new short- and long-term risk parameters from which a bearish policy and exposure can be objectively rebased and managed.
On a broader scale, the daily (above) and weekly (below) log scale charts show the market’s resumption of the 2-MONTH downtrend from 17-May’s 12.82 high. Amidst a return to relatively historically low levels in the Bullish Consensus (marketvane.net) measure of market sentiment and waning downside momentum on a daily basis, it’s easy to see the prospect that Fri’s latest spate of weakness could be a component of the completing 5th-Wave of a textbook Elliott sequence down from the may high. BUT a recovery above at least 8.49 and preferably 9.20 is required to CONFIRM the bullish divergence in momentum and raise the odds of this count. Until such strength is shown, the trend is down on all practical scales and should not surprise by its continuance or acceleration.
These issues considered, a bearish policy remains advised for longer-term commercial players with a recovery above 8.49 required to pare this exposure to more conservative levels and commensurately larger-degree strength above 9.20 to neutralize remaining expose and prepare for a major (2nd-Wave) corrective rebuttal to May-Jul’s downtrend. Shorter-term traders whipsawed out of our cautious bullish punt are advised to return to a cautious bearish policy and exposure with a recovery above 8.49 required to negate this call and warrant its cover.
DEC MATIF WHEAT
Similarly, Fri’s relapse below the prior couple weeks’ support in the 315.25-to-313.00-area negated our reasons for a cautious risk/reward punt from the bull side and reinstated and reaffirmed the past couple month’s major peak/reversal count. The important by-products of this resumed weakness is the market’s definition of smaller- and larger-degree corrective highs at 336.50 and 355.50 that this market is required to recoup to threaten and then break May-Jul’s downtrend. Until and unless such strength is proven, the trend is down on all practical scales and should not surprise by its continuance or acceleration. And per such, these levels represent our new short- and long-term bearish risk parameters.
The prospect that the resumed weakness from 11-Jul’s 355.50 high is the completing 5th-Wave of a 5-wave Elliott sequence from 17-May’s 437.50 high is clear, especially given the developing POTENTIAL for a bullish divergence in daily momentum. But until this divergence is CONFIRMED above at least 336.50, there’s no way to know that this prospective 5th-Wave or the 3rd-wave down from 06-Jun’s 396.75 high isn’t “extending” to levels protractedly lower.
On a broader scale, the daily (above), weekly (above) and monthly (below) log scale charts show the past couple months’ major reversal as well as list some Fibonacci progression and retracement relationships that all cut across in the 303-to-300-area. This grouping is interesting. These levels are also merely “derived”, and as such are useless other than being “interesting” until and unless accompanied by a confirmed bullish divergence in momentum needed to arrest the clear and present downtrend. Herein lies the importance and objective relevance of the recent corrective highs and risk parameters identified at 336.50 and 355.50.
These issues considered, a bearish policy remains advised for longer-term commercial players with a recovery above 336.50 required to pare exposure to more conservative levels and commensurately larger-degree strength above 355.50 required to neutralize remaining exposure and prepare for a larger-degree 2nd-Wave correction of May-Jul’s downtrend. Shorter-term traders whipsawed out of bearish and bullish exposure last week are advised to return to a cautious bearish stance with a recovery above 336.50 required to negate this call and warrant its cover. In lieu of a recovery above at least 336.50, further and possibly protracted losses straight away are expected.
