Posted on Feb 06, 2024, 09:48 by Dave Toth

While the market has yet to take out the past three weeks’ 4.37-area lows and support, only a glance at the hourly chart below is needed to see that it cannot mount any type of upside impulsive behavior whatsoever.  The market just can’t get off its duff, with recovery attempts labored and corrective, maintaining the broader downtrend and continuing to reinforce a bearish count.  On this short-term basis, strength above at least 25-Jan’s 4.53 corrective high remains minimally required to even defer, let alone threaten the major bear market.  Per such, we maintain this 4.53 level as our short-term bear risk parameter pertinent to shorter-term traders with tighter risk profiles.

On a broader scale, the daily log high-low chart above and close-only chart below shows the well-entrenched downtrend with a recovery above that 4.52/4.53-area required to confirm a bullish divergence in daily momentum.  But even then, the magnitude of the secular bear trend would preclude us from concluding anything more than an intermediate-term (probable 4th-Wave) corrective bounce.  Indeed, commensurately larger-degree strength above a greater amount of former support-turned-resistance from the 4.61-to-4.71-range is required to truly threaten the secular bear.  Per such, we’re maintaining 4.71 as our key long-term bear risk parameter pertinent to longer-term commercial players.

Moving out still further, the weekly (above) and monthly (below) active-continuation charts show the dominance of the secular bear market with only short-term support from the 4.37-area standing in its way to what we believe are ultimate losses to a $3.00-handle where a ton of former price action from 2014 until 2020 is likely to arrest this mega-bear over the course of the next year or two or three or four.

Understandably historically bearish sentiment levels are typical of major BASE/reversal-threat environments and these conditions will eventually accompany a major bottom.  but we would remind traders that contrary opinion is not an applicable technical tool in the absence of an accompanying confirmed bullish divergence in momentum needed to, in fact, break the clear and present and major downtrend pattern of lower lows and lower highs.  Herein lies the importance of the bear risk parameters discussed above at 4.71 and even 4.53.

We also know that with the spring comes a typically built-in risk premium to account for the uncertain planting season.  If/when such an event is going to prompt an interim recovery, we’ll need/want to navigate such precisely around recent corrective highs and former support-turned-resistance like levels like 4.53 and 4.71.  But between now and then, and in lieu of a recovery above at least 4.53, there’s no way to know how low the market could drive prices, including a run at 4.00.

These issues considered, a bearish policy and exposure remain advised with a recovery above 4.53 required for shorter-term traders to take profits and stand aside with commensurately larger-degree strength above 4.71 for longer-erm commercial players to follow suit.  In lieu of such strength, continued losses remain expected with indeterminable downside potential below 4.37, including a run at 4.00.

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