RJO FuturesCast

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Yesterday’s clear break above last week’s 47.74 high resurrects the broader base/reversal count introduced in 14-Jul’s Technical Webcast and leaves Mon’s 45.40 low in its wake as the latest smaller-degree corrective low this market is now required to sustain gains above to maintain a more immediate bullish count.  Its failure to do so will jeopardize the impulsive integrity of a longer-term bullish count, render Jun-Jul’s recovery attempt as a 3-wave and thus corrective affair and re-expose 2017’s broader downtrend.  In this regard 45.40 becomes our new short-term risk parameter to a resumed bullish policy for shorter-term traders with tighter risk profiles.  Former 47-handle-area resistance is considered new near-term support ahead of continued gains.

Crude Light 240 min Chart

Crude Light Daily Chart

This new short-term risk parameter at 45.40 may come in handy given the market’s encroachment on 48.29-to-48.92-range marked by the 50% retrace of this year’s 55.24 – 42.05 decline and the 1.000 progression of late-Jun’s initial 42.05 – 47.32-rally from 10-Jul’s 43.65 corrective low labeled in the daily chart above.  IF the past month’s recovery is a (bear market) correction, then it would be from reference points like this pair of derived Fibonacci relationships where we’d expect a bearish divergence in momentum to stem the rally.  Until and unless such a mo failure breaks the clear and present uptrend, these merely derived Fibonacci relations- like ALL such derived levels- pose only limited importance and are grossly insufficient to conclude resistance.

Indeed and supportive of our broader bullish bias, a similar combination of Fibonacci retracement and progression relationships are evident in the weekly log scale chart below at 41.90 and 41.45 that contributed to our base/reversal count.  The key difference here is that late-Jun’s bullish divergence in momentum BROKE the downtrend that identified 21-Jun’s 42.05 low as THE end of the decline and new market-defined support from which non-bearish decisions could then be objectively based and managed.  RELYING on such merely derived levels like Fibs, various “bands”, trendlines and the ever-useless moving averages as support (or resistance) WHILE the trend is in place exposes catastrophe to one’s trading account.

Crude Light Weekly Chart

Finally, traders are reminded of a major, multi-year base/reversal process that we still believe will ultimately expose a run to new highs above Jan’17’s 55.24 high that could reach the 75-to-100-range in the years ahead.  We have highlighted the long-term factors that support this stance many times since Feb’16’s bullish divergence in momentum broke the secular bear trend.  These factors include:

  • that bullish divergence in momentum amidst
  • historically bearish sentiment
  • an exact 1.000 progression of 2008-09’s initial counter-trend decline of 147.27 to 33.20 from May’11’s 114.83 corrective high and
  • a complete 5-wave decline from that May’11 high.

The extent of 2016’s recovery CONFIRMS 11Feb16’s 26.05 low as THE END of that secular bear trend from either May’11’s 114.83 low and possibly from Jul’08’s 147.27 all-time high.  That 26.05 low is considered the new secular risk parameter for a technical call for lateral-to-higher prices within a decade-long range of 147-to-26 that could span the next decade and include run-ups to this range’s upper-quarter (95.50) on a monthly log-scale basis below.

Is a run to 60 or 70 or 80 likely in the month or quarter or year ahead?  There’s no legitimate answer for this.  But until and unless this market starts sustaining impulsive behavior down below the approximate 40-area needed to even defer, let alone threaten such a bullish call, it would be short-sighted to ignore such a longer-term bullish prospect.

These issues considered, a bullish policy remains advised for longer-term players with a failure below 45.40 required to pare bullish exposure to more conservative levels and subsequent weakness below 43.65 required to jettison the position altogether.  Shorter-term traders whipsawed out of a bullish policy on 21-Jul’s momentum failure are advised to first approach setback attempts to the 47.50-area OB as corrective buying opportunities with a failure below 45.40 required to negate this call and warrant its cover.  We will be watchful for a bullish divergence in very short-term momentum on any such setback to try to zero in on a risk parameter even further.

Crude Light Monthly Chart

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