Posted on Oct 02, 2023, 09:34 by Dave Toth
As we’ll discuss from a longer-term perspective below, Fri’s break below 23-Aug’s 2.4086 larger-degree corrective low and our key long-term bull risk parameter in the Nov contract confirms a bearish divergence in momentum of a sufficient scale to conclude 15-Sep’s 2.7021 high as THE END of a textbook and major 5-wave Elliott sequence up from 04-May’s 1.9746 low. This larger-degree mo failure exposes a correction or reversal lower that could be major in scope, including a possible resumption of 2022’s major bear market.
Starting with a shorter-term basis, the 240-min chart below shows Fri’s continuation of mid-to-late-Sep’s downtrend that now leaves THREE pertinent highs in its wake at 2.4858, 2.5791 and especially 15-Sep’s 2.7021 high that this market is required to recoup to defer, threaten and then negate a peak/reversal count that could be major in scope. Per such, these levels represent our new mini, short- and long-term parameters from which traders can objectively base non-bullish decisions like long-covers and bearish punts commensurate with their personal risk profiles.
Readers of our blog know that we’ve been discussing the developing technical elements that have increasingly warned of a peak/reversal count since introducing them in 18-Sep’s Technical Webcast. In 25-Sep’s Technical Blog we discussed that day’s break below 25-Aug’s 2.5314 (1st-Wave) high that negated the impulsive integrity of an alternate bullish count and contributed further to a peak/reversal count. That weakness left only 23-Aug’s 2.4086 larger-degree corrective low and key long-term risk parameter to hold to maintain any prospect for a bullish count. Now that this larger-degree corrective low has been broken that, in fact, breaks May-Sep’s entire uptrend, the onus is squarely on the bull to recoup the corrective highs specified above to threaten and then negate a major peak/reversal count. Until such strength is shown, the decline from 27-Sep’s 2.5791 high cannot be ignored as the dramatic 3rd-Wave of an eventual 5-wave sequence down to what easily could be 2.21-handle-area prices straight away.
MIGHT the past couple days’ flush be the completing C-Wave of a major BULL market correction? Yeah, sure. BUT this market would need to arrest this onslaught rather immediately and recoup, initially, Fri’s 2.4858 mini corrective high and bear risk parameter and, subsequently, 27-Sep’s 2.5791 corrective high. Until/unless such minimum strength is shown, sustained, accelerated losses should not surprise.
Finally and from an even longer-term perspective, the extraordinarily labored recovery attempt from last Dec’s 2.0204 intra-week low and 2.0561 low weekly close that has retraced exactly 50% of last year’s decline is about as textbook an example of a corrective bear-flag pattern as we could sketch out. Left unaltered by a recovery above at least 15-Sep’s 2.7021 high in the Nov contract, this corrective recovery warns of an eventual resumption of last year’s major downtrend that preceded it to eventual new lows below 2.0000 in what we believe will be the reaffirmation of the new secular bear market in gas prices.