In Mon’s Technical Blog we identified 25-Feb’s 3.78-1/4 minor corrective high as the short-term risk parameter the market needed to sustain losses below to maintain a more immediate bearish count. Its failure to do so on Tue confirmed a bullish divergence in short-term momentum that defined 28-Feb’s 3.65-3/4 low as one of developing importance and our new short-term risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.
The subsequent rebound this week looks to be about as trendy and impulsive a move as it gets. This week’s recovery is NOT a labored, 3-wave-looking structure that one would considered a corrective bear flag consistent with a still-developing major bear trend. Rather, and while the market has yet to break a larger-degree corrective high and our longer-term risk parameter defined by 18-Feb’s 3.88 high, we believe the past week’s rally is just then initial A- or 1st-Wave of a broader base/correction/reversal process that will eventually produce extensive gains above 3.90. Such processes however typically include B- or 2nd-wave corrective rebuttals that, if unfold in a 3-wave manner as expected, will provide a preferred and excellent risk/reward buying opportunity.
On an even tighter basis, we can see momentum waning around the current 3.85-area, with a failure below yesterday’s 3.79 very minor corrective low confirming a bearish divergence in very short-term momentum. A failure below 3.79 will stem the past week’s rally and expose a relapse that we “suspect” will merely be a correction of the rally from 3.65-3/4. We will need a relapse-stemming bullish divergence in short-term mo however to reject/define a more reliable low from which we believe an excellent and favorable risk/reward buying opportunity will be presented. And we will look for this price action around the 3.76-to-3.74-area or just below. These levels represent the 50% and 61.8% retraces of the past week’s rally. Alone, these merely derived and so-called “technical levels” are approached as merely points of interest. BUT IF COMBINED with an accompanying confirmed bullish divergence in momentum, the buying (in this case) opportunity is golden and objective.
The daily charts above and below show the market’s gross failure to sustain late-Feb losses below a ton of former support around the 3.75-to-3.77-area that should have easily held as new resistance if the market were truly weak and vulnerable down there”. Unlike the soybean meal market however, this corn market has thus far failed to recoup a larger-degree corrective high and key risk parameter defined by 18-Feb’s 3.88 corrective high or that day’s 3.87 corrective high close. Along with the Dec contract still below what we believe is a key 3.89-area, we’ve got to consider the prospects of at least a (B- or 2nd-Wave) corrective retest of last week’s lows or a resumption of the broader bear. This said, 28-Feb’s 3.65-3/4 low remains intact as one of obvious importance and THE level the market needs to break to resurrect any broader bearish count and negate what we believe is a broader BASE/reversal count.
Finally, on a weekly active-continuation basis below, the price action down from last Oct’s 4.03 high in the then-prompt Dec’19 contract looks about as labored and corrective as it gets. On the heels of Sep-Oct’s rally and yet another rejection of the 3.60-to-3.40-range that has repelled ALL sell-off attempts for the prior TWO YEARS, it’s not hard to see that this market has proven NO ABILITY to sustain a bear trend anywhere near the lower-quarter of the past 3-1/2-YEAR lateral range that we maintain is a major, multi-year BASE/REVERSAL process that will produce 5.00 corn before 3.14 corn.
This past week’s rebound, as inconsequential as it appears relative to the past 3-1/2 years’ action, could be the early rumblings if this market’s next intra-range rebound. And, quite objectively, we believe the market has identified last Fri’s 3.65 low as the level the market needs to negate this specific call and the 3.88 level as a high it needs to break to reinforce this bullish call. In the meantime and if the market confirms a bearish divergence in very short-term mo below 3.79, we advised traders to be on the lookout for a corrective relapse to the 3.76-to-3.74-area where a relapse-stemming bullish divergence in short-term mo may produce an excellent and objective risk/reward opportunity from the bull side.