RJO FuturesCast

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Yesterday’s obliteration of the past FOUR MONTHS’ resistance ranging from 27-Mar’s 1.2617 high to 06Dec16’s 1.2776 high confirms our broader base/reversal count introduced in 27-Mar’s Technical Blog and discussed more recently in Mon’s Technical Webcast.  The 240-min chart below shows that this latest and most obvious spate of strength leaves smaller- and larger-degree corrective lows in its wake at 1.2515 and 1.2365 that now serve as our new short- and longer-term risk parameters from which a recommended bullish policy and exposure can be objectively rebased and managed.

Pound Index 240 min Chart

Pound Index Daily Chart

We’ve discussed the pertinence of the 1.27-handle-area for months as THE KEY resistance the market needed to sustain losses below to maintain odds of the secular bear trend.  The secular bear trend from even Jul’14’s 1.7192 high (let alone the 10-year bear from 2007’s 2.1160 high) is so massive it remains premature to CONCLUDE its end as a result of yesterday’s impulsive break above the pivotal 1.27-handle.  But the unique and powerful combination of:

  • a bullish divergence in WEEKLY momentum below amidst
  • historically bearish sentiment levels

exposes AT LEAST a major correction higher and quite possibly THE major reversal of the secular bear market.  Whatever the bull has in store for us, former 1.27-handle-area resistance now serves as a huge new support candidate ahead of further and possibly extensive gains straight away.

Pound Index Weekly Chart

On the broadest of scales the monthly log chart below shows how massive the secular bear market has been.  This week’s breakout hardly registers on this scale.  With market sentiment indicators recently achieving pessimistic levels not seen since 2001 however, the extent to which this market might now be vulnerable to higher levels should not be underestimated.  Former 1.35-to-1.38-range support from 2009 until Jun’16’s breakdown will be considered a key resistance candidate on this scale, but we’ll address that bridge if/when we get there.  For the time being however the trend is up on any practical scale and should not surprise by its continuance or acceleration.

In sum, a full and aggressive bullish policy and exposure remain advised with weakness below at least 1.2515 required to threaten this call and warrant defensive action.  In lieu of such weakness further and possibly extensive gains are expected with former 1.27-handle-area resistance considered new key support.

Pound Index Monthly Chart



While the Euro remains well below its Feb/Mar 1.08-handle-area resistance, yesterday’s break above last Thur’s 1.0678 initial counter-trend high confirms the bullish divergence in momentum we were looking for to stem Mar/Apr’s (suspected corrective) relapse attempt and exposes at least a larger-degree correction higher and very possibly reinforces a base/reversal count that we believe could be major in scope.  As a direct result of yesterday’s continuation of the past week’s recovery, the 240-min chart below shows that the market has identified Mon’s 1.0602 low as the latest smaller-degree corrective low and new short-term risk parameter it now must sustain gains above to maintain a more immediate bullish count.  In this regard 1.0600 is considered our new short-term risk parameter from which recommended longs at 1.0690 from 06-Apr’s Trading Strategies Blog can be objectively rebased and managed.

Euro Index 240 min Chart

Euro Index Daily Chart

The daily log scale chart above shows the bullish divergence in momentum that not only stems Mar/Apr’s sell-off attempt, but renders it a corrective/consolidative affair within a still-arguably-developing BASE/reversal process dating from 03-Jan’s 1.0341 low.  If correct this count warns of increasingly trendy, impulsive rallies to levels potentially well above 1.09.  Historically bearish sentiment levels shown in the the weekly chart below and monthly chart (bottom) contribute mightily to this major base/reversal-threat environment.

Euro Index Weekly Chart

The market’s gross failure to sustain Dec’16 losses below nearly two years of former 1.0460-to-1.0525-area support-turned-resistance and the Fibonacci fact that the decline from May’14’s 1.3993 high was virtually identical in length (i.e. 1.000 progression) to 2008-2010’s preceding 1.6040 – 1.1876 decline also contribute to an intriguing base/reversal environment that, again, could be absolutely major in scope.

These issues considered, a bullish policy remains advised with weakness below 1.0600 required for shorter-term traders to move to the sidelines and longer-term players to pare bullish exposure to more conservative levels.  Ultimately this market is still required to break our long-term risk parameter defined by 22-Feb’s 1.0493 larger-degree corrective low to mitigate a major base/reversal count and re-expose the secular bear.  Until such weakness is shown, we anticipate further and increasingly trendy, impulsive price action higher to levels potentially well above 1.09.  Former 1.0675-area resistance is considered new near-term support.

Euro Index Weekly Chart


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