Posted on Jan 30, 2023, 09:25 by Dave Toth

In Thur’s Technical Blog, we introduced some base/reversal elements that warned of another intra-range rebound that we’ll reiterate below.  So what’s changed in just the past couple trading days to warrant a bullish punt from current 86.20-area prices?

  1. Fri’s drop to a 48% reading in our RJO Bullish Sentiment Index, its lowest level in THREE YEARS, and
  2. today’s prospective retest of Thur’s 83.70 low that COLUD be the b- or 2nd-Wave of a base/correction/reversal count that

present a pure risk/reward environment from the bull side.

While a recovery above last week’s 88.32 high is required to confirm such a reversal higher, a relapse below Thur’s 83.70 low is required to negate it.  Considered a short-term but key objective bull risk parameter and given the PROSPECT of a reversal above 88.32 that, given bearishly-skewed sentiment levels, could be extensive, we believe a pure risk/reward buying opportunity is presented.

The daily (above) and weekly (below) charts show the elements introduced Thur that warn of another intra-range rebound that could be extensive:

  • a confirmed bullish divergence in daily momentum from
  • the extreme lower recesses of the past year’s range amidst
  • bearish sentiment/contrary opinion levels that haven’t been seen in at least two years and, in the case of our RJO BSI, since Dec’19 and
  • Thur’s “outside day up”.

A recovery above 27-Jan’s 88.32 high is required to render that high an initial counter-trend high on a larger-degree and confirm a larger-degree correction or reversal of Dec-Jan’s major relapse from 97.40 that could be extensive within the bounds of the past year’s range.  And to negate this call, all the bear needs to do is break last week’s 83.70 low that defines the specific risk on this bullish call.

Finally and on an even longer-term basis, the monthly log active-continuation chart below sows the market deep within the middle-half bowels of its historical lateral range where the odds of aimless whipsaw risk remain high.  This warrants a more conservative approach to risk assumption that places emphasis on identifying tighter but objective directional risk parameters like 88.32 and 83.70.

These issues considered, traders are advised to move to a cautious bullish stance at-the-market (86.45 OB) with a failure below 83.70 required to negate this call and warrant its immediate cover.  In lieu of such weakness and especially on a recovery above 88.,32, further and possibly sharp gains should not surprise straight away.

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