In 10-Feb’s Technical Blog we discussed some vulnerability creeping into this market following that day’s bearish divergence in short-term momentum.  In the now-prompt May contract, that was the failure below 03-Feb’s 5.35 corrective low that identified 09-Feb’s 5.72 high as one of developing importance and the then-short-term risk parameter the market needed to recoup to confirm the sell-off attempt as a 3-wave and thus corrective affair and reinstate the secular bull.

Now, as a result of this week’s slip below 19-Feb’s 5.40 corrective low, the market has identified another interim top at 5.59-1/4 on 23-Feb.  This additional short-term mo failure breaks the recovery attempt from 10-Feb’s 5.30 low and resuscitates the correction or reversal attempt down from 09-Feb’s 5.72 high.  Per such, we’re defining 5.60 as our new short-term risk parameter this market is now minimally required to recoup to reinforce a longer-term bullish count that contends the sell-off attempt from that 5.72 high is indeed a 3-wave and thus corrective structure within the still-developing major bull trend.  Until and unless the market recoups at least 5.60, the extent of either the completing c-Wave to a correction OR the 3rd-Wave of a major reversal is indeterminable and potentially extreme.

Stepping back, it’s easy t see the slowed rate of ascent in the May contract in the daily chart above over the past month-and-a-half that threatens the major bull.  We still believe that commensurate larger-degree weakness below 25-Jan’s 4.99 Globex day-session larger-degree corrective low remains required to, in fact, break the major bull trend and suggest a complete 5-wave Elliott sequence up from last Apr’s 3.09 low as labeled in the weekly log chart below.  But historically frothy bullish sentiment/contrary opinion levels not seen since 2012’s infamous peak/reversal remains as a constant threat and eventual contributor to an inevitable major peak and reversal.

Additionally, on an even broader monthly log scale basis below, it’s interesting to note that this waning upside momentum, potentially complete 5-wave Elliott sequence and stratospheric sentiment are unfolding from a massive rally from Apr’20’s 3.09 low that came within a measly three pennies of the (5.77) 61.8% retrace of the secular bear trend from Aug’12’s 8.49 all-time high to last year’s 3.09 low.  So to be sure, it is not hard at all to find considerable threats, or at least deferrals, to the past 10 month’s major reversal.  A recovery above 5.60 will reinforce the count that suggests the sell-off attempt from 09-Feb’s 5.72 high is a corrective/consolidative affair ahead of a resumption of the major bull.  By the same token, until this 5.60 high is overtaken, further correction OR reversal lower is expected, with a failure below 4.99 confirming a major momentum failure and exposing a deeper correction or reversal lower that could be major in scope.

These issues considered, shorter-term traders with tighter risk profiles remain advised to maintain a cautious bearish policy with a recovery above 5.60 required to negate this call and warrant its cover ahead of a then-expected resumption of the bull.  Longer-term commercial players are advised to pare bullish exposure to more conservative levels and jettison the position altogether on a failure below 4.99.


Yesterday’s recovery above last week’s 4.78 high reaffirms the major uptrend with the important by-product being the definition of yesterday’s 4.66 low as the latest smaller-degree corrective low and new short-term risk parameter this market’s required to sustain gains above to maintain a more immediate bullish count.  Its failure to do so will confirm a bearish divergence in short-term momentum and expose at least and interim correction but possibly a more protracted one.  Former 4.62-to-4.60-area would be expected to hold as new support per any broader bullish count.  A failure below 4.60 would be the next iterative proof of developing weakness and vulnerability if/when the market fails below 4.66.

On a broader basis, it’s clear in the daily chart below that commensurately larger-degree weakness below 25-Jan’s Globex day-session low of 4.26 remains required to, in fact, break the 10-month bull. As this is quite a lot to give back for even longer-term commercial players, paring exposure to more conservative levels on a failure below the 4.60-area is advised.  In lieu of weakness below at least 4.66 and preferably 4.60, the major trend remains arguably up and should not surprise by its continuance.


Finally, the May-Dec spread continues to come in and should not surprise by further and even accelerated erosion.  A recovery above at least a smaller-degree corrective high at 0.84-cents remains required to arrest the decline and expose it as a 3-wave and thus corrective event that might then re-expose the major uptrend.

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.