RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The market’s failure overnight below 11-May’s 2.5000 low renders the past week-and-a-half’s recovery attempt from 08-May’s 1.4725 low a 3-wave affair as labeled in the 240-min chart below. Left unaltered by a recovery above yesterday’s 2.5595 high this 3-wave rebound is considered a corrective/consolidative affair that warns of a resumption of early-May’s plunge that preceded it. This action threatens our base/reversal count discussed in 11-May’s Technical Blog and defines yesterday’s 2.5595 high as our new short-term risk parameter from which non-bullish decisions like long-covers and bearish punts can be objectively rebased and managed.

Copper 240 min Chart

Copper Daily Chart

Today’s admittedly short-term weakness resurrects our broader bearish count introduced in 23-Feb’s Technical Blog calling for a major correction of the entire 5-wave Elliott sequence from Jun’16’s 2.0130 low to 13-Feb’s 2.8230 high labeled in the weekly log scale chart below. We targeted the 2.48-to-2.45-range for this corrections (to the extent that such targets or forecasts matter) because these areas mark the 38.2% retrace of the Jun’16 – Feb’17 rally and Dec’16’s 4th-wave of lesser degree corrective low.

What ACTUALLY matters in navigating the prospective end of a downtrend and possible reversal higher is MOMENTUM. And a confirmed bullish divergence in momentum requires the market to recover above some prior corrective high. In the daily chart above 01-May’s 2.6945 high is considered the larger-degree corrective high the market is required to recoup to, in fact, break the past quarter’s downtrend, render it a 3-wave and thus corrective affair and re-expose the long-term bull. A clear break below 08-May’s 2.4725 low will be somewhat refreshing as this may allow us to consider yesterday’s much tighter corrective high at 2.5595 as THAT corrective high and risk parameter around which we can effectively navigate a longer-term base/reversal count. In lieu of at least such 2.5595+ strength however, we believe further and possibly accelerated losses have once again been exposed.

Copper Weekly Chart

Traders are reminded that from a very long-term perspective shown in the monthly log chart below, the long-term trend remains arguably up, suggesting the past quarter’s relapse is just a correction and an eventual buying opportunity. Until the market recovers above at least 2.5595 however, further correction or reversal behavior down should not surprise.

These issues considered, shorter-term traders with tighter risk profiles are advised to cover recently recommended cautious bullish exposure and approach an intra-2.4725-to-2.5595-range bounce as a corrective selling opportunity with a recovery above 2.5595 required to negate this call. Longer-term players remain advised to maintain a cautious bearish policy with strength above 2.5595 required to move to a neutral-to-cautious-bullish policy and a break below 2.4725 to move back to a full bearish policy.

Copper Monthly Chart

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.