Posted on Mar 06, 2023, 09:00 by Dave Toth
MAY CHI WHEAT
Today’s break below last week’s 7.02 low reinstates and reaffirms our major bearish count and leaves Thur’s 7.22 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recoup to even defer, let alone threaten the bear. In this regard, this 7.22 level is considered our new short-term bear risk parameter pertinent to shorter-term traders with tighter risk profiles, trailed from 23-Feb’s previous 7.59 corrective high and short-term risk level.
Especially given the developing potential for a bullish divergence in short-term momentum, it’s not hard to see the prospect that the portion of the bear from 02-Mar’s 7.22 high might be the completing 5th-Wave of an Elliott sequence down from 14-Feb’s 8.08 larger-degree corrective high and key long-term bear risk parameter. But this prospect means nothing against the backdrop of the major bear trend until/unless CONFIRMED by a recovery above 7.22.
Stepping back, the daily (above) and weekly (below) log scale charts show the trend as down on all scales. Further and possibly accelerated losses straight away should hardly surprise as there are NO levels of any technical merit below the market to look to as a support candidate. Furthermore, given the magnitude of the 10-month, $5.48, 44% bear market from May’22’s 12.42 high in the May contract, commensurately larger-degree strength above 14-Feb’s 8.08 larger-degree corrective high remains required to, in fact, break even Oct-Mar’s portion of the secular bear trend.
The weekly chart below also shows understandably historically bearish sentiment levels typical of major BASE/reversal-threat environments. But we would remind traders that sentiment/contrary opinion is not an applicable technical tool in the absence of an accompanying confirmed bullish divergence in momentum of a scale sufficient to threaten the major bear. And indeed, as a result of 24-Feb’s relapse below 23-Jan’s 7.21 low, the market has nullified mid-Feb’s bullish divergence in WEEKLY momentum and reinstated the secular bear trend.
These issues considered, the trend remains down on all scales warranting a full and aggressive bearish policy and exposure. A recovery above at least 7.22 is required to even defer, let alone threaten this bearish count, warranting a move to the sidelines by shorter-term traders and pared bearish exposure by longer-term commercial players. In lieu of such strength, further and possibly accelerated losses straight away remain expected.
MAY MATIF WHEAT
As a result of today’s break below 01-Mar’s 270.25 low, the technical construct and expectations for the May Matif wheat market are identical to those detailed above in Chi wheat with 02-Mar’s 277.25 smaller-degree corrective high considered our new short-term bear risk parameter and 14-feb’s 299.00 larger-degree corrective high remaining intact as our key long-term bear risk level.
In lieu of strength above at least 277.25, the trend is down on all scales and should not surprise by its continuance or acceleration straight away with NO levels of any technical merit below the market.
In sum, a bearish policy and exposure remain advised with a recovery above 277.25 required for short-term traders to move to the sidelines and for longer-term commercial players to pare exposure to more conservative levels.