Over the past two months, since 26-Mar’s Technical Blog following the extent and impulsiveness of late-Mar’s rebound, we’ve built the case for a major base/correction/reversal environment from 23-Mar’s 1.0671 low. This count was (and remains) predicated on:
- the market’s 1Q20 proximity to the extreme lower recesses of the 3-1/2-YEAR range
- waning downside momentum on a major, weekly scale
- historically bearish sentiment/contrary opinion levels and
- a potentially complete Elliott sequence down from Feb’18’s 1.2580 high.
While commensurately larger-degree strength above 09-Mar’s 1.1502 corrective high remain required to, in fact, break 2018-2020’s massive downtrend, for the reasons listed above we believe the risk/reward merits of a bearish policy are questionable and that a longer-term bullish policy is much preferred. Today’s break above 01-May’s 1.1029 high reinforces this call.
By breaking above the past month’s 1.1029 resistance, the market has confirmed another bullish divergence in momentum and reinforces a count that contends that the relapse attempt from 27-Mar’s 1.1188 high is indeed a 3-wave and thus corrective event that warns of a resumption of late-Mar’s uptrend that preceded it. This week’s resumed rally leaves smaller- and larger-degree lows in its wake at 1.0874 and 1.0774, respectively, that the market must now fail below to threaten and then negate the impulsive integrity of a suspected 5-wave rally from 24-Apr’s 1.0739 low that would be expected to accelerate straight away.
These issues considered, a bullish policy and exposure remain advised with a failure below 1.0874 required for shorter-term traders to step aside and commensurately larger-degree weakness below 1.0774 for long-term players to follow suit. In lieu of such weakness, further and possibly accelerated gains straight away are expected to what could be levels well above 27-Mar’s 1.1188 high.
