Posted on Aug 29, 2023, 06:52 by Dave Toth
Overnight’s break below 23-Aug’s 238.25 low renders the past week-and-a-half’s bounce from 17-Aug’s 237.00 low to Thur’s 245.00 high the 3-wave and thus corrective event we discussed in recent updates. Left unaltered by a recovery above 245.00, this high identifies the end or upper boundary of this correction ahead of the expected resumption of Jul-Aug’s downtrend that preceded it and possibly the resumption of the 15-month secular bear trend. Per such, last week’s 245.00 high serves as our new mini parameter from which the risk of a continued or resumed bearish policy and exposure can be objectively rebased and managed by shorter-term traders with tight risk profiles.
The daily log chart below shows not only Jul-Aug’s downtrend that preceded the recent corrective bounce, but also the clear 3-wave recovery from 31-May’s 221.25 low to 24-Jul’s 268.75 high. Left unaltered by a recovery above 268.75, that 2-month, 3-wave recovery is considered a corrective/consolidative structure that warns of a resumption of the 15-month secular bear market to eventual new lows below 221.25. In this long-term regard, that 268.75 high continues to serve as our key long-term bear risk parameter pertinent to longer-term commercial players.
08-Aug’s 254.00 corrective high currently serves as an intermediate-term bear risk parameter, but following the expected break of 17-Aug’s 237.00 low, we will trail this short-term bear risk parameter to last week’s 245.00 high and also trail our long-term bear risk parameter to 254.00.
Lastly, the weekly log close-only chart of the Dec contract shows the magnitude of the 15-month secular bear trend and Jun/Jul’s relatively piddly recovery attempt that falls well within the bounds of a mere (prospective 4th-Wave) correction ahead of an expected (5th-Wave) resumption of the bear to new lows below May’s low(s). These issues considered, a bearish policy and exposure remain advised with a recovery above 245.00 required for shorter-term traders to move to the sidelines in order to circumvent the heights unknown of a steeper correction and commensurately larger-degree strength above 268.75 for longer-term players to follow suit. In lieu of such strength, further and possibly accelerated losses are expected straight away.