Posted on Aug 14, 2023, 09:54 by Dave Toth
Fri’s break below 07-Aug’s 4.89 low reaffirms our bearish count discussed in 28-Jul’s Technical Webcast and leaves Fri’s 5.08 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recoup to confirm a bullish divergence in momentum, arrest the slide and expose even an interim corrective rebound. In this regard, this 5.08 level serves as our new short-term parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a continued bearish policy and exposure.
Former 4.89-to-4.93-area support is considered new near-term resistance ahead of further and possibly steep losses.
This tight but objective short-term bear risk parameter at 5.08 may come in handy given the market still holding around 13-Jul’s obviously pivotal 4.81 low and support. A clear break below 4.81 exposes a vast chasm totally devoid of any technical levels of merit to consider as support candidates to hold it up. Indeed, on a larger scale the extent and impulsiveness of the past few weeks’ decline from 24-Jul’s 5,72 Globex day-session high and that day’s 5.69 close and exact 61.8% retrace of Jun-Jul’s 6.30 – 4.83 decline on a daily log close-only basis below is totally consistent behavior with our long-term count calling the past 16-month decline from Apr’22’s 8.25 high a new secular bear market that may have miles and quarters to go. To even threaten this long-term bearish count, the market needs to recoup 24-Jul’s 5.72/5,69 corrective high. Per such, this area is considered our new long-term bear risk parameter pertinent to longer-term commercial players.
Stepping back even further, the weekly log close-only chart above and monthly log chart below show not only the magnitude of the massive, multi-quarter peak/reversal process from last year’s high and major bear trend, but also NO levels of any technical merit below 13-Jul’s 4.81 pivotal low shy of YEARS of former resistance-turned-support around the 4.50-to-4.00-range from 2015 until Dec’20’s breakout above it. A clear break below 4.81 could easily expose a run at a $3.00-handle.
These issues considered, a bearish policy and exposure remain advised with a recovery above 5.08 required for shorter-term traders to stand aside and for even longer-term commercial players to pare bearish exposure to more conservative levels to circumvent some of the risk of an interim corrective rebuttal that could be relatively small but nominally steep under current higher volatility conditions. In lieu of at least a recovery above 5.08 and especially if the market breaks 4.81, further and possibly protracted losses remain expected.