While the hourly chart of Globex day-session prices below does not yet reflect overnight’s gains that show the market currently trading around 8.12, this performance reinforces a resumed longer-term bullish count introduced in 19-Jan’s Technical Webcast following that day’s bullish divergence in short-term momentum that provided early evidence that the entire Nov-Jan sell-off attempt from 8.75 to 7.36 was a 3-wave and thus corrective structure. This week’s continuation of early-Jan’s basing behavior leaves smaller- and larger-degree corrective lows in its wake at 7.75 and 7.36 that this market is now required to relapse below to defer and then negate this resumed bullish count. Per such and importantly, these levels serve as our new short- and longer-term risk parameters from which a resumed and more aggressive bullish policy and exposure can be objectively based and managed.
On a daily log scale basis above, the extent and impulsiveness of this month’s recovery from 7.36 easily shows the Nov-Jan decline as a 3-wave affair as labeled. Left unaltered by a relapse below 7.36, this 3-wave event is considered a corrective/consolidative affair that now warns of a resumption of the secular bull trend shown in the monthly log chart below that preceded it. Moreover, sustained, trendy, impulsive behavior higher should not come as a surprise in the period immediately ahead.
If there’s an interim wet blanket on this bullish count, it’s the market’s position in the middle of the past couple months’ range where we don’t want to underestimate the odds of aimless whipsaw risk typical of such range-center environs. But herein lies the importance of identifying a tighter but objective risk parameter like yesterday’s 7.75 smaller-degree corrective low. In effect, the bullish bet on a move to new highs above 8.75 can assume risk only to 7.75. A relapse below 7.75 won’t necessarily negate the long-term bullish count, but it would defer or threaten it enough to warrant defensive measures. Until and unless this market fails below at least 7.75, there’s no way to know the trendy, impulsive 5th-Wave to new highs above 8.75 isn’t launching straight away.
These issues considered, traders are advised to move to a new bullish policy and exposure at-the-market (8.13 OB) with a failure below 7.75 required to defer or threaten this call enough to warrant its cover. In lieu of such weakness, further and possibly accelerated gains straight away are anticipated.