Posted on Aug 09, 2023, 10:02 by Dave Toth

Today’s impulsive spike above 26-Jun’s 2.911 high confirms a major multi-month base/reversal process introduced in 26-Jun’s Technical Blog that still required the market to satisfy the third of our three key reversal requirements:  the weathering of a 3-wave corrective rebuttal to Jun’s initial counter-trend rally.  By virtue of today’s break above 2.911 and as discussed as a likelihood in Mon’s Technical Blog, the market has confirmed the sell-off attempt from Jun’s 2.911 high to 02-Aug’s 2.457 low as a 3-wave and thus corrective structure.  On the heels of late-Jun’s bullish divergence in WEEKLY momentum and proof of 5-wave impulsive behavior on that initial counter-trend rally, the market has satisfied all three of our key reversal requirements and warns of at least a major correction of 2022-23’s massive collapse and potentially a major reversal higher that could span months or even quarters to indeterminable heights.

The 240-min chart below details the past week’s impressive, impulsive rally that obviously defines 02-Aug’s 2.457 low as the larger-degree (B- or 2nd-Wave) corrective low that serves as our new long-term bull risk parameter pertinent to longer-term commercial players.  To negate this major bullish count, the Sep contract must fail below 2.457.  Until and unless such weakness is proven, the new major trend is up and should not surprise by its continuance or acceleration straight away.

On a shorter-term basis, yesterday’s 2.692 low looks to be the latest smaller-degree corrective low this market is now minimally required to fail below to threaten a bullish count.  In this regard this 2.692 level serves as our new short-term bull risk parameter pertinent to shorter-term traders with tighter risk profiles.

As discussed many times since 14-Apr’s 1.946 low on an active-continuation chart basis above and below, the elements typical of a major base/reversal threat have been prevalent:

  • the potential for a bullish divergence in weekly momentum, ultimately confirmed by Jun’s rally
  • historically bearish sentiment/contrary opinion levels
  • the prospect that the entire Aug’22 – Apr’23 decline was a textbook complete 5-wave Elliott sequence, and
  • the market’s return to and rejection of the lower-quarter of its massive but lateral historical range.

These are the same elements that warned of and accompanied major base/reversals in 2020, 2016, 2016 and 2009 and that now warn of a major reversal higher that could easily result in multi-month or multi-quarter gains to the $4.00-handle-area or higher.

These issues considered, a full and aggressive bullish policy and exposure remain advised with a failure below at least 2.692 and preferably 2.457 required to threaten and then negate this call and warrant defensive measures commensurate with one’s personal risk profile.  In lieu of such weakness, further and possibly steep, protracted gains straight away are expected.

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