RJO FuturesCast

Daily Futures Market News, Commentary, & Insight


While the market still hasn’t broken our previous short-term risk parameter defined by 10-Apr’s 1248.2 low, yesterday’s break below last Wed’s 1260.7 low clearly reaffirms a developing slide from 17-Apr’s 1297.4 high that is sufficient enough at this stage to conclude that 1297.4 high is the END of the uptrend from 10-Mar’s 1194.5 low.  By virtue of yesterday’s resumption of the past couple weeks’ slide, yesterday’s 1272.4 high now serves as the latest smaller-degree corrective high and our new short-term risk parameter from which non-bullish decisions like long-covers and cautious bearish punts can now be objectively based and managed.

Needless to say, 17-Apr’s 1297.4 high is THE high and key risk parameter the market is required to recoup to mitigate any broader peak/reversal threat, reinstate the longer-term bull and expose potentially steep gains thereafter.  In this regard 1297.4 is considered our new long-term risk parameter ahead of a larger-degree correction or possible reversal lower.

Gold 240 min Chart

The market’s failure over the past week or so to sustain mid-Apr’s breakout above former 1261-to-1265-area resistance connotes at least some weakness and vulnerability that should not surprise by its continuance until or unless the market recovers above at least 1272.4.  This said, the relapse from 17-Apr’s 1297.4 high has yet to reach the scope of the last BULL market correction from 27-Feb’s 1264.9 high to 10-Mar’s 1194.5 low.  That correction stalled at the exact 50% retrace of Dec-Feb’s 1124 – 1265 rally.  We have no idea if the (1246) 50% retrace of Mar-Apr’s 1194.5 – 1297.4-rally will hold or if the market will blow right through it.

We do NOT place any stock in merely derived technical levels like Fib retraces that are not accompanied by a bullish (in this case) divergence in momentum needed to stem the clear and present intermediate-term downtrend.  Herein lies the importance of recent correctives HIGHS like 1272.4 as we try to discern the past couple weeks’ slide as either a corrective or reversal event.

Gold Daily Chart

Gold Weekly Chart

Traders are reminded that from a very long-term perspective the market arguably remains within a major base/reversal process following Feb’16’s break of the secular bear market from Sep’11’s 1920 all-time high.  Against this major base/reversal backdrop the long-term trend remains arguably up until the market breaks at least 10-Mar’s 1194.5 major corrective low shown in the weekly log scale chart above.  On this basis we will be watchful for a bullish divergence in shorter-term momentum somewhere between spot and 1194.5 as a favorable risk/reward buying opportunity that could have far-reaching implications.  For the time being however and on a more practical scale at least the intermediate-term trend is down and should not surprise by its continuance or acceleration with a recovery above 1272.4 minimally required to tilt the directional scales the other way.

Gold Monthly Chart



After 24-Apr’s mo failure below 10-Apr’s 17.735 corrective low and short-term risk parameter discussed in that day’s Technical Blog, the 240-min chart below shows that the market has maintained a steady, still-developing downtrend.  Currently 25-Apr’s 18.05 high serves as the latest smaller-degree corrective high and short-term risk parameter the market is minimally required to recoup to negate a bearish count.  Given the deep, 3rd-wave-nature of last week’s continued decline however, we strongly suspect that the market will provide at least a little hiccup of a (4th-Wave) corrective bounce before resuming to at least one more (5th-Wave) new low for the move.  The top of that hiccup will become a much tighter but still objective risk parameter to a current cautious bearish stance.

Silver 240 min Chart

Silver Daily Chart

The market nibbled yesterday below 15-Mar’s key 16.825 larger-degree corrective low that confirms a bearish divergence in WEEKLY momentum shown below.  Combined with still-frothy levels in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC, traders are urged not to underestimate the extent to which this market might now be vulnerable to further and possibly steep losses.

BUT IF something bigger to the bear side is brewing- like to levels well below 20Dec16’s 15.675 low- then it’ll be important for the bear to behave like one once the market breaks the Mar low.  For while last Dec’s 15.675 low remains intact, we cannot ignore the still-bullish longer-term prospect that all of the price action from 27-Feb’s 18.54 high- including Mar-Apr’s run to a new high at 18.655- is a CORRECTION ahead of an eventual resumption of 2016’s major uptrend.

Silver Weekly Chart

Indeed, traders are reminded here too that 2016’s rally BROKE the secular bear market from Apr’11’s 49.82 all-time high, exposing a base/reversal environment that is expected to be major in scope.  A relapse below Dec’16’s 15.675 low remains MINIMALLY required to threaten this long-term bullish count.

These issues considered, a cautious bearish policy is advised with strength above 18.05 required to negate this call at this point.  We suspect an interim corrective bounce ahead of resumed losses with the yet-unknown high to that bounce becoming our new, tighter risk parameter.  Another look at the daily chart above shows NO levels of any technical merit below 15-Mar’s 16.825 low shy of Dec’s 15.675 low, so the market could fall apart in the period immediately ahead.  Whether it does so OR produces a bullish divergence in mo somewhere between 16.825 and 15.675 remains to be seen and will provide the next clue in our long-term count.

Silver Monthly Chart

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