In yesterday’s Technical Webcast we discussed shoring up short-term bull risk to 24-Nov’s 71.85 low, as its break would render it an initial counter-trend low and confirm a bearish divergence in short-term momentum.  The 240-min chart below shows the market’s break of this level and a key area of former resistance-turned-support overnight that defines 23-Nov’s 74.27 high as one of developing importance and POSSIBLY the end of a major 5-wave Elliott sequence hat dates from 02-Apr’s 51.64 low.  Per such, 23-Nov’s 74.27 low is considered our new short-term risk parameter from which non-bullish decisions like long-covers and cautious bearish punts can now be objectively based and managed.  Fri’s 73.50 corrective high serves as an even tighter micro risk parameter from which short-term traders can base and manage the risk of a bearish play.

This admittedly short-term weakness could have long-term implications as ancillary evidence warns of a peak/reversal threat that could be major in scope.  This evidence includes:

  • The prospect that the rally from 02-Ar’s 51.64 low is a complete 5-wave Elliott sequence as labeled above
  • Waning upside momentum on both a daily and weekly basis
    • Confirmed on commensurately larger-degree weakness below 02-Nov’s 68.91 next larger-degree corrective low and key risk parameter
  • Historically frothy levels in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC
  • The market’s proximity to and thus far rejection of 13Jan20’s 73.00 high.

As is typically the case, we cannot conclude a broader peak/reversal count from proof of just short-term weakness like today’s below 71.85.  But we absolutely can conclude 23-Nov’s 74.27 high as objective risk parameter from which non-bullish decisions can be objectively based and managed.

These issues considered, shorter-term traders have been advised to neutralize all bullish exposure and are further advised to establish a cautious bearish policy and exposure from 71.50 OB with a recovery above 27-Nov’s 73.50 micro corrective high and risk parameter required to negate this specific call and warrant it cover.  Long-term players have been advised to pare bullish exposure to more conservative levels and are further advised to neutralize remaining exposure on a failure below 68.91 AND also roll into at least a cautious bearish policy at that point.

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.