Overnight’s break above last Mon’s 175.98 high reaffirms the intermediate-term uptrend, with the important by-product being the market’s definition of Wed’s 174.80 low as the latest smaller-degree corrective low the market is now required to fail below to confirm a bearish divergence in momentum, stem the rally from 05-Jun’s 172.57 low and expose at least a corrective rebuttal lower. In lieu of such sub-174.80 weakness, further and possibly accelerated gains should not surprise. Per such, this 174.80 level becomes our new short-term risk parameter from which traders can rebase and manage the risk of a cautious bullish policy and exposure.
Former 176.00-to-175.75-area resistance would be expected to hold as new near-term support.
This tight but objective risk parameter at 174.80 may come in handy given the market’s position deep within the middle-half bowels of this year’s 182-to-171-range in the Sep contract where we approach the odds of aimless whipsaw risk as higher, warranting a more conservative approach to risk assumption. Traders are reminded that Mar-may’s exact 61.8% retrace of Mar’s 182.09 – 170.87 collapse remains intact as a textbook 3-wave and thus corrective structure that warns of an eventual resumption of Mar’s downtrend that preceded it. The challenging, fair-pulling-out part of this thing however is that that 170.87 – 177.77 recovery may only be the first phase of a more protracted, aimless, lateral continuation of a broader corrective/consolidative event.
A break above 05-May’s 177.77 high and key risk parameter remains required to threaten this count and possibly re-expose the secular bull market shown in the weekly log active-continuation chart below where Aug’19 – Mar’20’s exact 50% retracement of Mar’18 – Aug’19’s entire 156.22 – 179.66 secular bull trend is about as textbook a 3-wave and thus corrective structure as any Elliott geek can mock up. If correct, this 8-month, 3-wave, 50% correction may have set the stage for a resumption of the secular bull to eventual 179.66+ levels.
On this weekly active-continuation basis below, there are no levels of any technical merit shy of 09-Mar’s 179.31 high. On a daily basis of the Sep contract above however, 05-May’s 177.77 high serve as a pertinent threshold the market needs to recoup to maintain a broader bear-market-corrective count. Per such, we believe the market has identified 177.77 and 174.80 as the key directional triggers heading forward.
In sum, a cautious bearish stance remains OK for long-term players with a recovery above 177.77 required to threaten this call enough to warrant its cover. Shorter-term traders with tighter risk profiles remain advised to maintain a cautious bullish policy with a failure below 174.80 required to negate this call and warrant its cover. In lieu of such sub-174.80 weakness, further and possibly accelerated gains should not surprise.