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The market’s recovery yesterday above our short-term risk parameter defined by 23-Jun’s 4.93-1/4 corrective high confirms a bullish divergence in momentum. This mo failure leaves Fri’s 4.71 low in its wake as THE END to a textbook 5-wave Elliott sequence down from 04-Jun’s 5.33 next larger-degree corrective high and thus a new short-term but KEY risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can now be objectively based and managed.
![](https://rjofutures.rjobrien.com/images/2020/07/wheat-60min-chart.gif)
Stepping back, the daily chart below shows the past few days’ recovery thus far only retracing to an area of key former support from the 4.97-to-5.01-area between May and Mar that cannot be ignored as a new resistance candidate. However, the textbook smaller-degree 5-wave Elliott sequence from 04-Jun’s 5.33 high is arguably the completing 5th-Wave of a textbook larger-degree sequence down from 31-Mar’s 5.70 high that, if correct, would warn of a larger-degree correction or reversal higher that could be relatively protracted.
![](https://rjofutures.rjobrien.com/images/2020/07/wheat-sep20-daily-chart.gif)
Contributing to the prospect of a more extensive recovery from Fri’s 4.71 low is the return to relatively low, bearish levels in both our sentiment/contrary opinion indicators- the Bullish Consensus (marketvane.net) and our proprietary RJO Bullish Sentiment Index- shown in the weekly log chart below. Additionally, the market’s recent and current position deep within the middle-half bowels of its massive lateral range warrants a more conservative approach to risk assumption due to the greater odds of aimless whipsaw risk typical of such range-center conditions.
These issues considered and while we concede that yesterday’s bullish divergence in momentum is of too small a scale to conclude a larger-degree recovery, the wave, sentiment and range-center elements are too conspicuous to ignore from a risk/reward perspective. Per such, both short- and longer-term traders are advised to neutralize previously recommended bearish exposure if they haven’t done so already and move to a new cautiously bullish policy until negated by a relapse below 4.71. Setback attempts to the 4.85-to-4.81-range are advised to first be approached as corrective buying opportunities ahead of a suspected reversal to the 5.20-to-5.30-area or higher and a relapse below 4.71 required to negate this call and warrant its immediate cover.
![](https://rjofutures.rjobrien.com/images/2020/07/wheat-weekly-chart.gif)