The market’s recovery overnight above 26-Jan’s 3.6415 high and our short-term risk parameter negates our peak/reversal count introduced in 27-Jan’s Technical Blog, renders the sell-off attempt from 08-Jan’s 3.7340 high a textbook 3-wave and thus corrective event as labeled in the 240-minute chart below and re-exposes the major bull trend from 19Mar20’s 1.9725 low. Recommended bearish exposure has been negated and neutralized ahead f further and possibly sharp gains ahead. The 240-min chart below also shows Fri and overnight’s strength leaving smaller- and larger-degree corrective lows in its wake at 3.5370 and 3.4910, respectively, that now serve as our new short- and longer-term risk parameters from which non-bearish decisions like short-covers and resumed bullish punts can be objectively based and managed. The market’s position still in the middle of the past month’s 3.7340 – 3.4910-range could pose aimless whipsaw risk however, so bullish exposure should be conservative at this juncture.
On a longer-term basis, it’s easy to see how the market’s inability to make any sustained, trendy, impulsive headway lower after breaking 11-Jan’s 3.5515 initial counter-trend low that confirmed a bearish divergence in daily momentum renders Jan’s sell-off attempt a labored, consolidative affair that, against the backdrop of the major bull trend, re-exposes that trend. The weekly chart below still shows historically frothy bullish sentiment that’s typical of major peak/reversal environments and contributed to our bearish call. But as a result of the past few days’ recovery that threatens the impulsive integrity of such a peak/reversal-threat process, the market is required to re-weaken below 28-Jan’s 3.4910 low to threaten a resumed bullish count and resurrect a bearish one. Until such sub-3.4910 weakness is proven, we’re identifying Jan’s sell-off as a (4th-Wave) correction ahead of a (5th-Wave) resumption of the bull to eventual new highs above 08-Jan’s 3.7340 high.
The risk/reward merits of initiating directional exposure from the middle of the past month’s range are poor, so shorter-term traders are advised to maintain a neutral/sideline policy for the time being. Longer-term commercial players are OK to consider a cautious bullish policy from current 3.6350-area levels OB with a failure below 3.4910 required to negate this call and warrant its cover. In lieu of a relapse below at least 3.5370 and preferably below 3.4910, further and possibly accelerated gains should not surprise.