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.

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.