RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Jan 18, 2023, 07:49 by Dave Toth

Overnight’s break above 03-Jan’s 81.50 high and our key longer-term bear risk parameter confirms a bullish divergence in weekly momentum that warns of a larger-degree correction or reversal higher.  The 240-min chart below details the trendy, impulsive nature of the rally from 05-Jan’s 72.46 low.  The past couple days’ continuation of this uptrend leaves Mon’s 78.53 low in its wake as the latest smaller-degree corrective low the market is now required to sustain gains above to maintain a more immediate bullish count.  Its failure to do so will confirm a bearish divergence in short-term momentum and break the uptrend from 05-Jan’s 72.46 low.  Per such, Mon’s 78.53 low is considered our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage non-bearish decisions like short-covers and bullish punts.  05-Jan’s 72.46 low serves as our new long-term bull risk parameter pertinent to longer-term commercial players.

On a broader scale, the importance of the market’s break above 03-Jan’s 81.50 high is that that high is now confirmed as an initial counter-trend high that confirms a bullish divergence in WEEKLY momentum.  This 81.50+ break confirms AT LEAST a resumed correction of Nov-Dec’s downtrend from 93.74 to 70.08 and possibly a more protracted correction or reversal of Jun-Dec’s entire $53, 43% decline from last Ju’s 123.68 high where even a Fibonacci minimum 38.2% retrace of this 6-month downtrend doesn’t cut across until the 87-handle-area.

Additionally, this week’s resumption of Dec’s initial counter-trend recovery attempt shows the market thus far failing to sustain Nov-Dec losses below last Sep’s 79-hanbdle-area support-turned-resistance on a weekly close-only basis below.  This confirms at least intermediate-term and possibly longer-term strength until/unless litigated by a relapse below 05-Jan’s 72.46 low.

From an Elliott Wave perspective, this month’s rally from 05-Jan’s 72.46 low is either the completing c-Wave of another bear market correction or the 3rd-Wave of a more protracted correction or reversal higher.  Always biasing WITH a wave count consistent with the ongoing trend and not wanting to underestimate this uptrend’s potential, traders are advised to anticipate further and possibly extended 3rd-wave-type gains until/unless a bearish divergence in momentum arrests this clear and present and developing uptrend.

These issues considered, a bullish policy remains advised for shorter-term traders with a failure below 78.53 required to defer or threaten this call enough to warrant a move to the sidelines.  Longer-term commercial players have been advised to neutralize all remaining bearish exposure and are further advised to move to a new bullish stance from current 81.95-area prices OB with a failure below 78.53 required to pare exposure to more conservative levels and commensurately larger-degree weakness below 72.46 required to neutralize remaining exposure ahead of a resumption of the major bear trend.

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