Posted on Feb 09, 2024, 08:03 by Dave Toth
With yesterday’s continued losses, the market demolished 14Apr23’s 1.946 low, reinstated the secular bear market from Aug’22’s 10.028 high and posted the lowest price since Sep’20. The trend is down on all scales and should not surprise by its continuance, but longer-term traders are reminded of this market’s current position at the extreme lower recesses of a historical range over the past 25 years (approx 300 months) where it has spent only 17 months (5.6%) below 2.000. The brunt of these 17 months occurred between Jan’20 and Aug’20 before the market exploded higher.
Indeed, this market could spend considerable time “down here” below 2.000. But to maintain the risk/reward merits of a continued bearish policy, it is imperative for the bear to continue to BEHAVE LIKE ONE by sustaining trendy, impulsive behavior to the downside. Recoveries above recent corrective highs and bear risk parameters specified below will threaten a bearish count and expose potentially sharp recoveries. Until/unless the market recoups these corrective highs, the monthly chart below shows NO levels of any technical merit below the market shy of Jun’20’s 1.517 low.
Drilling down to smaller scales, the daily log chart of the Mar contract above and the 240-min chart below show the clear and present downtrend that leaves smaller- and larger-degree corrective highs in its wake at 2.127 and 2.791 and former 2.04-to-2.08-area support-turned-resistance. To maintain a bearish construct, this market should easily be able to sustain trendy, impulsive behavior below 05-Feb’s 2.127 corrective high. Its failure to do so and break of the past month’s downtrend from 2.791 will NOT allow us to conclude a major bottom. Indeed, commensurately larger-degree strength above 2.791 is required to expose a major reversal higher. But such smaller-degree strength above 2.127 WOULD question the risk/reward merits of a continued bearish policy and exposure for at least shorter-term traders to move to the sidelines and for even longer-term commercial to question how aggressive bearish they’d then want to remain “down here”.
These issues considered, a bearish policy and exposure remain advised with a recovery above 2.127 required to defer or threaten this call enough for shorter-term traders to move to the sidelines and for longer-term commercial players to pare bearish exposure to more conservative levels. In lieu of such strength, further losses should not surprise ahead of what could be a more severe test or even break of 2020’s 1.517 low.