RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Yesterday’s clear, impulsive relapse below 19-Jan’s 98.19 low and our short-term risk parameter left in the wake of Mon’s bullish divergence in short-term momentum above 13-Jan’s 98.43 high nullifies that divergence, chalks up the recent pop as a corrective event and reinstates the secular bear trend that we believe could be generational in scope.  As a result of this renewed weakness, the 240-min chart above and daily chart below show that the market has identified Mon’s 98.45 high as the latest smaller-degree corrective high and thus the minimum level this market needs to recoup to even defer, let alone threaten the bear.  Per such, 98.45 becomes our new short-term risk parameter from which traders can objectively rebase and manage the risk of a resumed bullish policy and exposure.

On a longer-term basis, the weekly chart below shows the sheer magnitude of the 17-MONTH decline from Aug’20’s 99.79 high that we believe is just the start of a massive, perhaps generational reversal of a trend higher in rate contracts that has been in place since the early-’80s.  Given what we believe is still a major 3rd-Wave down from Jun’21’s 99.51 high as labeled below, commensurately larger-degree strength above at least 31-Dec’s 98.64 larger-degree corrective high remains required to arrest the current 3rd-Wave stage of the bear and expose a larger-degree corrective recovery.  In this regard, that 98.64 level remains intact as our key long-term risk parameter.

These issues considered, a full and aggressive bearish policy and exposure remain advised for longer-term institutional players with a recovery above 98.64 required to defer or threaten this call enough to warrant defensive measures.  Shorter-term traders whipsawed out of bearish exposure following Mon’s bullish divergence in short-term mo are advised to resume a bearish tack from current 98.18-area levels OB with a recovery above 98.45 required to negate this specific call and warrant its cover.  In lieu of such 98.45+ strength, the trend is down on all scales with indeterminable and potentially extreme downside potential ahead.

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