RJO FuturesCast

Daily Futures Market News, Commentary, & Insight


Yesterday’s continued rally above the past week’s 1.1447-area resistance reaffirms this year’s major uptrend and, perhaps most importantly, leaves smaller-degree corrective lows in its wake at 1.1312 and even 1.1379 that the market would now be expected to sustain gains above if it’s still truly strong “up here”.  Given the market’s proximity to the extreme upper recesses of the 2-YEAR range, it’s failure to sustain gains above these levels will confirm admittedly smaller-degree momentum failures that could morph into more significant corrections or reversals lower.  In this key regard 1.1379 and 1.1312 are considered our new micro- and short-term risk parameters to a still-advised bullish policy.

Euro 240min Chart

Euro Daily Chart

The daily log scale chart above shows the nicely developing POTENTIAL for a bearish divergence in the RSI measure of momentum.  However, proof of weakness below 05-Jul’s 1.1312 corrective low is required to CONFIRM this divergence to the point of non-bearish action like long-covers and bearish punts.  But the combination of:

  • this developing momentum failure
  • the prospect that the past three weeks’ component of the bull from 20-Jun’s 1.1118 low is the completing 5th-Wave of a 5-wave Elliott sequence from 02-Mar’s 1.0494 low
  • 3-year highs in bullish sentiment levels shown in the weekly log chart below, AND
  • the market’s position at the extreme upper recesses of the 2-YEAR range

is a powerful one that clearly warns of a peak/reversal-threat condition that could be significant in scope and a more conservative approach to bull risk assumption.  Herein lies the crucial importance of even very short-term corrective lows and risk parameters like 1.1379 and 1.1312.  These issues considered, a bullish policy remains advised with a failure below 1.1379 sufficient to warrant a move to the sidelines by shorter-term traders with tighter risk profiles.  Further weakness below 1.1312 is required for even longer-term players to pare or neutralize bullish exposure.  In lieu of such weakness a continuation of this year’s bull should not surprise.

Euro Weekly Chart


USD Index

US Dollar 240min Chart

The technical construct and expectations for the USD Index are identical to those detailed above for the Euro, only inverted, with 05-Jul’s 96.51 smaller-degree corrective high considered our new short-term but pivotal risk parameter around which a still-advised bearish policy can be effectively based and managed.  The market’s failure to sustain sub-96.52 losses may expose a relatively larger-degree correction or reversal higher, the indeterminable heights and risk of which should be circumvented by shorter-term traders.  20-Jun’s larger-degree corrective high at 97.87 still serves as our long-term risk parameter for longer-term players.

US Dollar Daily Chart

US Dollar Weekly Chart

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