RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Oct 17, 2022, 07:34 by Dave Toth

Overnight’s clear break below the past couple weeks’ lows and support reaffirms and reinstates our major peak/reversal count introduced in 29-Aug’s Technical Blog and leaves Thur’s 6.777 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recover above to even defer, let alone threaten this bearish count.  Per such, this 6.777 level serves as our new short-term risk parameter from which a still-advised bearish policy and exposure can be objectively rebased and managed by shorter-term traders with tighter risk profiles.

Former 6.30-to-6.40-area support is considered new near-term resistance.

Taking a step back, the daily high-log chart above and close-only chart below show today’s clear continuation of this major reversal that has dropped 40% from 23-Aug’s 10.04 intra-day high.  07-Sep’s 7.828 intra-day low and/or that day’s 7.911 low close serve as our key longer-term bear risk parameter pertinent to longer-term commercial players.  These lows are either the 1st-Wave lows of an eventual 5-wave sequence down from 22/23-Aug’s highs OR the A-Waves of major BULL market corrections.  At this juncture, a minimum recovery above this area remains required to suggest the 2-month decline might be a (major 4th-Wave) correction ahead of a (5th-Wave) resumption of the secular bull trend from Jun’20’s 1.517 low.  If/when this market even defers the major downtrend above our short-term risk parameter at 6.777, this 7.828/7.911-area will become the next key technical threshold.

Finally and on still longer-term scales in the weekly log active-continuation chart above and monthly log chart below, the key elements on which our major peak/reversal count is predicated remain intact:

  • waning upside momentum amidst
  • what was historically extreme bullish sentiment
  • an arguably complete and massive 5-wave Elliott sequence up from 2020’s low and
  • the market’s proximity to the upper-quarter of its decades-long historical range.

Against this backdrop, the extent and impulsiveness of the past couple months’ decline is consistent with and reinforces this major peak/reversal count.  Might there be a countering 2nd-Wave corrective rebuttal to this initial counter-trend decline that could be extensive in terms of both price and time?  Yes, absolutely.  And we will address such an interim bullish risk if/when the market proves “non-weakness” above a corrective high like 6.777.  Until and unless such strength is shown however, the trend remains down on al practical scales and should not surprise by its continuance or acceleration.

These issues considered, a bearish policy and exposure remain advised with a recovery above 6.777 required for shorter-term traders to move to the sidelines and for longer-term commercial players to pare exposure to more conservative levels.  In lieu of such strength, further and possibly accelerated losses should not surprise straight away.



Disclaimer:

The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.



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