Posted on Oct 05, 2023, 10:23 by Dave Toth

The extent and impulsiveness of today’s spike above 19-Sep’s 3.025 corrective high close in the Nov contract (above) confirms a bullish divergence in daily momentum that defines Mon’s 2.841 low daily close as the end of a 5-wave Elliott sequence down from 09-Aug’s 3.451 high close and potentially a massive 5-wave sequence down from its Aug’22 high weekly close at 6.095 shown in the weekly log close-only chart below. This count calls for a major correction or reversal of at least Aug-Oct’s decline and very possibly the entire Aug’22 – Sep’23 decline. Per such and for some longer-term base/reversal elements still intact on an active-continuation basis, we’re defining Mon’s 2.841 low as or new key long-term bull risk parameter from which longer-term commercial players can objectively base non-bearish decisions like short-covers and resumed or initial bullish exposure.

On a shorter-term intra-day basis below, this chart shows this week’s impressive, impulsive rally above 19-Sep’s 3.072 corrective high that leaves smaller- and larger-degree intra-day corrective lows in its wake at 2.965 and 2.820 that serve as our short- and long-term bulk risk parameters.  Until and unless this market fails below at least 2.965 and especially the 2.84-to-2.982-area, further and potentially major gains are anticipated.

On a long-term active-continuation basis, the technical elements of our major base/reversal count introduced in 18-Apr’s Technical Webcast remain well intact and have been reinforced by today’s move to new highs for what is now a 6-MONTH reversal to its highest levels since Jan:

  • the market’s foray into and rejection of the lower-quarter of its massive but lateral historical range amidst
  • historically bearish sentiment/contrary opinion levels
  • waning downside momentum on a major scale (the bull divergence confirmed in mid-May), and a
  • textbook complete and major 5-wave Elliott sequence down from Aug’22’s 10.028 high.

These are the same elements that warned of and accompanied all of the previous four major reversals in 2020, 2016, 2012 and 2009.

While we’ve had to deal with Aug-Sep’s (5th-Wave) continuation of this specific contract’s major downtrend from Aug’22’s high, the broader base/reversal threat remained well intact on a long-term active-continuation basis.  Now, today, the Nov contract’s bullish divergence in daily momentum above 3.025 breaks its downtrend enough to move to a bullish count and policy in this contract.

These issues considered, traders are advised to return to or maintain a bullish policy and exposure with a failure below at least 2.965 and preferably 2.820 required to threaten and then negate this bullish call and warrant paring or neutralizing exposure.  In lieu of such weakness, further and possibly protracted, long-term gains to the 4.00-handle-area or higher in the months and quarters ahead are expected.  And these gains could start to unfold in a sharper, extended manner.

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