Fri’s break below 05-Jul’s 1.2894 initial counter-trend low reaffirms the interim peak/correction count discussed in 05-Jul’s Technical Blog and leaves Thur’s 1.2984 high in its wake as the latest smaller-degree corrective high the market now needs to sustain losses below to maintain a more immediate bearish count.  Its failure to do so will render the sell-off attempt from 30-Jun’s 1.3031 high the 3-wave and thus corrective affair we subjectively believe it to be.  In this regard and just below 30-Jun’s 1.3031 high and short-term risk parameter, we believe Thur’s 1.2984 corrective high serves as an even tighter but important risk parameter that, if recouped, could re-expose not only late-Jun’s uptrend, but possibly all of 2017’s bull market to new highs above 1.3050.

The fact that the past week-and-a-half’s sell-off attempt has thus far retraced only a Fibonacci minimum 38.2% of late-Jun’s 1.2589 – 1.3031 rally would reinforce this bull market correction count if the market were able to recoup Thur’s 1.2984 high.  In lieu of such 1.2985+ strength however at least the intermediate-term trend remains down and could result in further and possibly steep losses.

The extent of late-Jun’s recovery is not unimpressive especially given a prospective 3-wave and thus corrective May-Jun decline from 1.3049 to 1.2589 that stalled at virtually the exact (1.2579) 50% retrace of Mar-May’s 1.2109 – 1.3049 rally that preceded it.  While the 1.3031-to-1.3049-area that defines the upper boundary of the past couple months’ range remains a considerable resistant cap, further intra-1.3050-to-1.2590-range consolidative wafting should hardly come as a surprise.  But 21-Jun’s 1.2589 low remains intact as the critical long-term risk parameter the bear is obligated to break to threaten or negate our long-term bullish count that calls for an eventual 1.3050+ upside breakout ahead of what we still believe will be a run at the 1.35-to-1.38-range.

Traders are reminded this market is still coming off major base/reversal-threat conditions stemming from the unique combination of:

• a confirmed bullish divergence in WEEKLY momentum amidst
• historically bearish sentiment not seen since 2001 and
• an arguably complete 5-wave Elliott sequence down from Jul’14’s 1.7192 high labeled in the monthly log scale chart below.

If we’re correct in our interpretation of these technical events, then a major correction or reversal is at hand with former 1.35-to-1.38-handle area support from 2009 until Jun’16’s breakdown the next key resistance candidate on a very long-term basis.

These issues considered, a cautious bullish policy remains advised for longer-term players with a failure below 1.2589 required to negate this call and warrant its cover.  A neutral-to-cautiously-bearish policy remains OK for short-term traders with a recovery above 1.2985 threatening this call enough to warrant moving to a neutral/sideline position ahead of then-increased odds of a breakout above 30-Jun’s key 1.3031 high that could then expose a resumption of 2017’s major uptrend and a run at the 1.35-to-1.38-range.