RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Yesterday’s break below last week’s 2.747 low reaffirms our preferred bearish count and leaves Mon’s 2.848 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recoup to confirm a bullish divergence in short-term momentum, stem the slide and expose even an interim corrective rebound. In this regard 2.848 becomes 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 tight risk profiles.
The daily (above) and weekly (below) log scale charts of the Jan contract look hideously bearish. The trend not only remains down, clearly, the past couple weeks it has ACCELERATED in true 3rd-wave style. This warns of 1) further losses ahead and 2) at least one decent-sized (4th-wave) consolidation and another (5th-wave) round of losses thereafter before the downtrend may end. To defer or threaten the bear the market simply has to start showing signs of “non-weakness” by recovering above even smaller-degree corrective highs and risk parameters like 2.848.
If there’s a caveat too a bearish count that highlights the importance of a tight but objective risk parameter like 2.848, it’s the market’s proximity to 2017’s 2.641 low and support on an active-continuation chart basis shown in the weekly log chart below. A break below 2.641 exposes an area totally devoid of any technical levels of merit shy of Mar’16’s 1.611 low. This does not mean we’re forecasting a move to 1.611. But it certainly does mean that until or unless the market stems the clear and present downtrend with proof of strength above a recent corrective high, ANY amount of downside below 2.641 would be possible, including a run at 1.611.

In sum, a bearish policy and exposure remain advised with strength above 2.848 required to defer or threaten this call enough to warrant paring or neutralizing bearish exposure commensurate with one’s personal risk profile. In lieu of such strength further and possibly steep, accelerated losses should not surprise, especially on a break below Feb’s 2.641 low.


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