Posted on Jun 01, 2023, 08:21 by Dave Toth

By breaking 05-May’s 2.233 low, the Jul contract has confirmed our bearish count updated most recently in 25-May’s Technical Blog that contended the recovery attempt to 19-May’s 2.816 high was part of a correction from 14-Apr’s 2.386 low.  In fact, this is a new contract low in the Jul23 contract that was originally listed in Aug 2013.  As a direct result of this resumed major bear trend, the 240-min chart above and daily log chart below show that the market has identified yesterday’s 2.410 high and 19-May’s 2.816 high as the latest smaller- and larger-degree corrective highs it must now recoup to threaten and then negate a continued bearish count and exposure.  Per such, these levels represent our new short- and long-term parameters from which traders can objectively rebase and manage the risk of a still-advised bearish policy and exposure commensurate with their personal risk profiles.

On a broader and active-continuation basis however, the weekly (above) and monthly (below) show that the market has yet to break 14-Apr’s 1.946 low in the then-prompt May23 contract.  This throws a wrench in a count that contends the secular bear market from last Aug’s 10.028 high has resumed.  This “roll” from one contract month to the next is one of the vagaries of the futures markets.

Since mid-Apr’s low, we’ve warned of the developing prospect for another major BASE/reversal-threat environment and PROCESS similar to those that unfolded around the Jun’20 low, Mar’16 low Apr’12 low and Sep’09 low for wave, sentiment/contrary opinion, momentum and lower-historical-range reasons.  We’ve also warned that this process is likely to be highly volatile, erratic and challenging, warranting a more conservative approach to directional risk assumption, with the so-called “easy” downtrend money behind us.  And herein lies the importance of identifying corrective highs and risk parameters like 2.410 and especially 2.816.  Whether or not the bear takes out mid-Apr’s 1.946 low is secondary in importance to the prompt contract sustaining trendy, impulsive behavior lower.

These issues considered, a bearish policy and exposure remain advised with a recovery above 2.410 required for shorter-term trades to step aside and commensurately larger-degree strength above 2.816 for longer-term commercial players to follow suit.  In lieu of such strength, further and possibly accelerated losses should not surprise, including a run at and possibly below mid-Apr’s 1.946 low on an active-continuation basis.

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