RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

DEC EURO

While yesterday’s break below Mon’s 1.1719 low reaffirms this month’s slide, the 240-min chart below shows the nicely developing POTENTIAL for a bullish divergence in momentum from the extreme lower recesses of the past couple months’ range.  Yesterday and overnight’s continued slide leaves yesterday’s 1.1775 high in its wake as the latest smaller-degree corrective high and new short-term risk parameter this market is now required to recover above to break the slide and CONFIRM a bullish divergence in momentum needed to reject/define a more reliable low and support from which non-bearish decisions like short-covers and cautious bullish punts can only then be objectively based and managed.

From a longer-term perspective, the daily chart above and weekly log chart below shows the pertinence of recent lower-1.17-handle-area prices.  These prices are not only at the lower recesses of the past couple months’ range, but also that of this entire year’s range.  Given:

  • what’s clearly only a 3-wave (and thus potentially corrective) decline thus far from Jan’s 1.2368 high that
  • has stalled in the exact area of the (1.1690) 38.2% retrace of 2020’s major 1.0671 – 1.2368 rally on a weekly log scale basis amidst
  • an erosion to generally bearish levels in our RJO Bullish Sentiment Index and
  • an arguably complete 5-wave Elliott sequence from 25-May’s 1.2271 high to 20-Aug’s 1.1669 low as labeled above,

if this market cannot muster up a reversal now, from the extreme lower recesses of the year’s range, then when?  These facts warn of an acute risk/reward opportunity from the bull side ahead of a potentially extensive reversal above the 1.19-handle and maybe even above 1.2368 with a failure below 20-Aug’s 1.1669 required to negate it.  The first minor reinforcing evidence of such a prospect however must come via a recovery above 1.1775 required to CONFIRM the bullish divergence in short-term momentum and break even this month’s downtrend, let alone threaten May-Aug’s broader slide.

These issues considered, a cautious bullish punt from at-the-market (1.1750) is advised with a failure below 1.1701 required to negate this specific call and warrant its cover.  Further strength above 1.1775 would warrant adding more aggressively to this position.  A relapse below 1.1669 annihilates this bullish prospect, reinstates this YEAR’S downtrend and exposes potentially steep losses thereafter.

DEC BRITISH POUND

The technical construct of sterling is identical to that detailed above in the euro, with the only difference being overnight’s CONFIRMED bullish divergence in short-term momentum above Tue’s 1.3694 high that defines yesterday’s 1.3610 low as the end of the decline from 14-Sep’s 1.3917 high and new mini risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can now be objectively based and managed.  Per such, a cautious bullish policy and exposure from at-the-market (1.3718) is advised with a failure below 1.3610 required to negate this specific call and warrant its cover.

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