RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Dec 02, 2022, 06:47 by Dave Toth

DEC23 EURODOLLAR

As we’ll address further down, overnight’s break above 16-Nov’s 95.47 initial counter-trend high confirms a bullish divergence in WEEKLY momentum that warns of a base/correction/reversal threat that could be major in scope.  On a shorter-term basis detailed in the 240-min chart below, this continued strength leaves 23-Nov’s 95.075 low in its wake as the latest smaller-degree corrective low the market is now required to sustain gains above to maintain not only a more immediate bullish count, but one that could be considerable, even explosive.  A failure below 95.075 would render the recovery attempt from 04-Nov’s 94.77 low a 3-wave and thus corrective affair that might then re-expose the secular bear market.  Per such, 95.075 is considered our new short-term risk parameter from which both short- and longer-term traders can objectively base non-bearish decisions like short-covers and new bullish punts.

Moving out to a longer-term scale, by breaking 16-Nov’s 95.47 initial counter-trend high, this market has confirmed a bullish divergence in WEEKLY momentum that, in fact, breaks at least Jul-Nov’s portion of the secular bear trend and exposes a correction or reversal higher that could be major in scope.  Per above, a failure below 05.075 would be the first sign that this new bullish call is in jeopardy while, obviously, a failure below 94.77 will negate this call and reinstate the secular bear market.

Reinforcing elements to this base/correction/reversal count include:

  • the lowest (21%) Bullish Consensus (marketvane.net) reading since Jul 2006 and
  • an arguably complete and massive 5-wave Elliott sequence down from Aug’20’s 99.72 high as labeled in the weekly chart below.

Even if this recovery is “just” a correction within a still-unfolding secular bear market, the extent of even Jul-Nov’s portion of the bear (245 bps!!!) exposes a relatively minor correction that could be nominally severe.  Per such and in sum, both short- and long-term traders are advised to move to or continue a bullish policy and exposure at-the-market (95.47) with a failure below 95.07 required to pare or neutralize exposure.  In lieu of such weakness, further and possibly accelerated gains straight away are expected.

DEC GERMAN BUNDS

As a result of today’s continued strength, this time above last week’s 142.60 high, the technical construct and expectations for the Dec bund market are virtually identical to those detailed above in the eurodollar contract with smaller- and larger-degree corrective lows at 139.78 and 135.76 identified as our new short- and long-term parameters from which to rebase and manage the risk of an advised bullish policy and exposure.  Further and possibly accelerated gains are anticipated straight away until and unless this market fails below at least 139.78.

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