Posted on Apr 05, 2023, 09:25 by Dave Toth
Today’s break below 23-Mar’s 87.80 low confirms our suspicions discussed in 27-Mar’s Technical Blog that contended that that day’s bullish divergence in short-term momentum likely signaled only a (4th-Wave) correction within the major bear trend. As a direct result of this resumed downtrend, the hourly chart below shows that this decline has left smaller- and larger-degree corrective highs in its wake at 92.75 and 94.70 that this market is now required to recoup to threaten and then break the downtrend and expose a larger-degree correction or reversal higher. In lieu of such strength, the trend is down on all scales and should not surprise by its continuance or acceleration straight away. Per such, 92.75 and 94.70 serve as our new short- and long-term parameters from which the risk of a continued or resumed bearish policy and exposure can be objectively rebased and managed by short- and longer-term traders, respectively.
On a broader scale, the daily (above) and weekly log (below) charts clearly show the resumption of the major bear trend in the Jun contract. These charts also show the developing POTENTIAL for a bullish divergence in daily momentum amidst the lowest (41%) reading in our RJO Bullish Sentiment Index since 2009. Traders are reminded however that sentiment/contrary opinion is not an applicable technical tool in the absence of an accompanying CONFIRMED bullish divergence in momentum needed to, in fact, stem the clear and present downtrend. Herein lies the importance of recent corrective highs and bear risk parameters at 92.75 and especially 94.70. Until and unless such strength is proven, these two prospective bullish factors simply are not applicable and will not prevent this market from continuing to fall off a table.
Lastly and as recently discussed. on an active-continuation basis, the long-term monthly log chart below shows the Jun contract still wafting around the upper-recesses of the middle-half of its massive but lateral historical range, where a return to merely the center of this range could produce Jun prices another 15-to-20-cents lower.
These issues considered, a bearish policy and exposure remain advised with a recovery above at least 92.75 and preferably 94.70 required to pare or neutralize exposure. In lieu of such strength, further and possibly protracted losses are expected.