RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

AUG GOLD

Today’s continued recovery above last week’s 1819.5 high reaffirms our bullish count and buy recommendation at 1810 discussed in 06-Jul’s Trade Strategies Blog and leaves smaller- and larger-degree corrective lows in its wake at 1791 and 1750 the market is now required to fail below to threaten and then negate this specific all.  Per such, these two levels represent our new short- and longer-term risk parameters from which a resumed bullish policy and exposure can be objectively rebased and managed.

From a longer-term perspective, only a glance at the daily log chart above and weekly log chart below is needed to see that this market remains deep within the middle-half bowels of the past 11-month range where the odds of aimless whipsaw risk remain high.  Such range-center condition warrant a more conservative approach to risk assumption that emphasizes tighter but objective risk parameters like 1791.

The reason we want to err on the side of the bull however is that until and unless the market breaks 08-Mar’s 1673.3 pivotal low and key long-term risk parameter, the price action down from Aug’20’s 2089 all-time high looks corrective/consolidative and warns of an eventual resumption of the secular bull trend that preceded it.  While we fully expect a resumption of the secular bull to 2100+ levels, there is no telling how long this market could waft aimlessly and laterally within the 2089 – 16730-range.  Herein lies the specific reason for a tight, conservative but objective risk parameter at 1791 to protect bullish exposure.  Until and unless such weakness is proven, further and possibly accelerated gains should not surprise.

Finally and from an even longer-term monthly log basis below, it’s easy to see the sell-off attempt from last year’s 2089 high as well within the bounds of a major (4th-wave) correction within the still-developing secular bull trend.  The Fibonacci fact that Aug’20 – Mar’21’s sell-off attempt stalled at precisely a minimum 38.2% retrace of Aug’18 – Aug’20’s (suspected 3rd-Wave) rally from 1167 to 2089 would seem to reinforce this long-term bullish call.

These issues considered, a bullish policy and exposure remain advised with a failure below 1791 deferring this call enough to warrant moving to a neutral/sideline position to keep powder dry for a preferred risk/reward buying opportunity.  In lieu of such sub-1791 weakness, further and possibly accelerated gains should not surprise.

OCT PLATINUM

Similarly, this week’s resumed strength above 06-Jul’s initial counter-trend high at 1118 confirms a bullish divergence in daily momentum that defines 21-Jun’s 1021.7 low as the prospective end to a 3-wave setback from 16-Feb’s 1348.2 high.  Left unaltered by a relapse below 1021.7, this 3-wave structure is considered a corrective/consolidative affair that warns of a resumption of the secular bull trend that preceded it.  Commensurately larger-degree strength above 10-May’s 1281.4 high remains required to CONFIRM this longer-term bullish count.  But by virtue of this week’s continuation of the past three weeks’ uptrend, we can also define 30-Jun’s 1049 low as the latest smaller-degree corrective low the market is now required to fail below to jeopardize the impulsive integrity of a bullish count that could have massive upside potential.

What’s really compelling about the long-term bullish prospects in platinum are:

  • Dec’20’s bullish divergence in MONTHLY momentum above Jan’20’s 1046 high that, in fact, broke the secular bear market from Mar 2008’s 2308 all-time high
    • although the recovery from Mar’20’s 562 low has thus far stalled at the exact 61.8% retrace of that 12-year decline
  • the market’s acknowledgement thus far of former 1035-area resistance from most of 2020 as new support shown in the weekly log chart below
  • market sentiment/contrary opinion that has eroded to relatively neutral/indifferent levels as a result of this year’s setback that now won’t inhibit a resumed major bull move, and
  • the fact that platinum remains at a sharp ($696) discount to gold after trading more than $1200 above gold back in 2008.

Even if this gold-platinum spread returns to “even” with gold not budging at all, this would place platinum up around 1800.  As discussed above however, we anticipate a resumption of the secular bull market in gold.  Platinum is likely to go with it and could easily outperform gold per the gold-platinum spread chart below.

These issues considered, a cautious bullish policy and exposure are advised in platinum as well with a failure below 1049 required to defer or threaten this call enough to warrant a move to the sidelines.  In lieu of such weakness, further and possibly accelerated gains should not surprise.

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