The past couple days’ accelerated rally in the now-prompt Jul contract leaves 13-Apr’s 7.63 low in its wake as the latest smaller-degree corrective low this market is now minimally required to fail below to threaten even the latest portion of the secular bull trend from 29-Mar’s 6.95 larger-degree corrective low. Per such, this 7.63 level becomes our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a still-advised bullish policy and exposure.
As always with such accelerating uptrends, referring to this market as “oversold” from a momentum perspective is outside the bounds of technical discipline and flat out wrong.
On a broader scale, 29-Mar’s 6.95 intra-day low and/or that day’s 7.10 low close serve as the latest larger-degree corrective low and our key long-term bull risk parameters pertinent to longer-term commercial players. Only a glance at the daily log close-only chart above and the weekly log chart below is needed to see that such larger-degree weakness is required to, in fact, break the secular bull trend. Moreover, it remains indeterminable whether the rally from Jan’s low is completing the major 5th- and final wave of an Elliott sequence that dates from last Sep’s 5.13 low or only the 3rd-Wave of an eventual 5-wave sequence that could maintain this secular bull well into the summer months.
Market sentiment/contrary opinion levels remain understandably stratospheric and typical of major PEAK/reversal environments. But we would remind traders that contrary opinion is not an applicable technical tool in the absence of an accompanying confirmed bearish divergence in momentum of a scale sufficient to threaten or break the major bull trend. Herein lies the importance of identifying a larger-degree corrective low and key risk parameter like 6.95.
Finally, while the monthly log active-continuation chart below is not yet reflecting Jul contract prices, this perspective shows no levels of any technical merit above the market shy of 2012’s 8.49 all-time high. And given the passage of nearly 10 years’ time, we’re not sure this level bears any technical merit. In effect then, until and unless this market weakens below at least 7.63 and preferably 7.10 on a closing basis, the trend is up on all scales and should not surprise by its continuance or acceleration to indeterminately higher levels. Bull hedges obviously remain advised for end-users while bear hedges for producers could be premature by months and would have no objective risk parameters unless an option strategy like a put back spread is deployed.
The technical construct for the Dec contract is identical to that detailed above in Jul with last Wed’s 7.24 smaller-degree corrective low and 29-Mar’s 6.31 larger-degree corrective low serving as our short- and long-term risk parameters from which a still-advised bullish policy and exposure can be objectively rebased and managed. Here too, unless altered by a proven failure below at least 7.24, the trend is up on all scales and expected to continue and perhaps accelerate straight away. The market’s remaining upside potential is indeterminable and potentially extreme.