RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The market’s failure Fri below 24-Jul’s 86.10 corrective low and short-term but key risk parameter discussed in 30-Jul’s Technical Blog confirms a bearish divergence in momentum that defines 01-Aug’s 89.98 as the END of the recovery from 06-Jul’s 81.75 low. Given the 3-wave sub-division of this recovery and Fibonacci fact that it stemmed from the (89.82) 61.8% retrace of Jun-Jul’s initial 94.82 – 81.75 decline, odds have increased that 01-Aug’s 89.98 is the B- or 2nd-Wave correction ahead of a suspected (C- or 3rd-Wave) resumption of Jun-Jul’s downtrend that preceded it. In this regard 89.98 is considered our new short-term risk parameter from which non-bullish decisions like long-covers and a resumed bearish policy by shorter-term traders can be objectively based and managed.

Cotton Dec '18 240min Chart

Cotton Dec '18 Daily Chart
From a longer-term perspective the past couple days’ relapse is consistent with a major peak/correction/reversal threat we introduced in 18-Jun’s Technical Blog that contended 08-Jun’s 94.82 high ENDED a 5-wave rally from Jun’17’s 65.80 low ahead of a major correction or reversal of that year-long rally. Historically frothy sentiment then AND STILL would seem to reinforce this peak/reversal threat that could be major in scope, warning of a resumption of Jun-Jul’s decline to levels potentially well below 06-Jul’s 81.75 low.

These issues considered, long-term players remain advised to maintain a bearish policy with strength above 89.98 required to pare exposure to more conservative levels and commensurately larger-degree strength above 94.82 required to negate the call altogether and warrant its cover. Shorter-term traders are advised to return to a bearish policy and first approach recovery attempts to the 86.10-area of former support-turned-resistance as corrective selling opportunities with a recovery above 89.98 required to negate this call and warrant its cover. In lieu of strength above at least 89.98, we anticipate further and possibly protracted losses straight away.

Cotton Dec '18 Weekly 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.