RJO FuturesCast

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Posted on Nov 07, 2022, 08:46 by Dave Toth

Today’s sharp rally and break above the past couple weeks’ 6.28-to-6.40-area resistance reaffirms our base/correction/recovery count discussed in 31-Oct’s Technical Blog and confirms 03-Nov’s 5.874 low as the latest smaller-degree corrective low this market is now required to sustain gains above to maintain a more immediate bullish count.  Per such, this 5.874 level serves as our new short-term risk parameter from which an interim bullish policy and exposure can be objectively rebased and managed.

Former 6.40-to-6.28-area resistance would be expected to hold as new near-term support.

From a long-term perspective, the combination of:

  • last month’s bearish divergence in weekly momentum amidst
  • historically bullish sentiment/contrary opinion levels
  • a complete and massive 5-wave Elliott sequence from Jun’20’s 1.517 low and
  • the extent and 5-wave impulsiveness of Aug-Oct’s (suspected 1st-Wave) decline

maintains a major peak/reversal-threat process until and unless nullified by a recovery above Aug’s 10.028 high on a weekly log active-continuation basis.  Against this backdrop, this current and expected recovery is considered the major (B- or 2nd-Wave) corrective rebuttal to Aug-Oct’s (A- or 1st-Wave) decline that, given the magnitude of 2020 – 2022’s secular bull trend, could be extensive in terms of both price and time.

In the daily log chart above, we noted the 50% and 61.8% retraces of Aug-Oct’s 10.119 – 5.345 decline at 7.354 and 7.930, respectively.  These merely derived levels are NOT considered resistance, but rather only areas of interest” around which to keep a keen eye on MOMENTUM, where a confirmed bearish divergence is required to arrest this intermediate-term uptrend and reject/define a more reliable high and resistance from which any non-bullish decisions like long-covers and/or cautious bearish punts can only then be objectively based and managed.  In lieu of such a momentum failure, an interim bullish policy and exposure remain advised ahead of further and possibly accelerated gains with a failure at this juncture below 5.874 required to negate this specific call.

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