In Fri’s Technical Blog we once again discussed the need for the bear to PERFORM “down here” at the lower-quarter of the incessant multi-year lateral range that we still believe is part of a major BASE/reversal process.  This morning’s recovery above a very minor corrective high from yesterday afternoon at 3.45 is about as minor a momentum failure as we can draw up, but it suffices in identifying today’s 3.38 low and exact 76.4% retrace of last Wed-Fri’s pop from 3.32 to 3.57 as one of developing importance and a micro risk parameter from which non-bearish decisions like short-covers and bullish punts can be objectively based and managed.

TO BE SURE, commensurately larger-degree strength above at least Fri’s 3.57 high and short-term risk parameter remains required to reinforce our base/reversal count.  But “down here” and for ancillary reasons discussed below, we believe the market is offering an acute and pure risk/reward opportunity from the bull side with a relapse below at least 3.38 and preferably 3.32 required to negate this call and warrant its cover.  In lieu of such weakness and especially if the market recoups Fri’s 3.57 high, we believe the risk/reward merits of a bullish policy and exposure from current 3.46-area levels to be very favorable indeed.

Only a glance at the steep, accelerated early-to-mid-Mar decline from 3.87 to 3.32 is needed to see that this stretch of decline is characteristic of only the 3rd-wave stage of an eventual 5-wave Elliott sequence.  This assertion further suggests that any recovery attempt is just a (4th-Wave) component of a slowdown process that would include yet another new (5th-Wave) low to complete the sequence.  “Theoretically”, this makes sense and causes us not to over-expect in terms of upside performance at this time.

What is technical fact however is:

  • the market’s dip into the lower-quarter of the massive lateral FOUR YEAR range that has repelled every such attempt over the past 2-1/2-years amidst
  • historically bearish levels in the Bullish Consensus ( that haven;’t been seen since those that warned of and accompanied Nov’17’s major low and reversal from 3.36.

If/when the market recoups Fri’s 3.57 high, we presume the technical and fundamental reasons for such will, by then, be obvious.  The risk/reward merits of chasing bullish exposure “up there” won’t be horrendous, but they’d pale in comparison to those being presented today.

Finally and from an even longer-term perspective, we remind traders that despite years of supply, demand, U.S. political, geopolitical and now, even global pandemic issues, this market has yet to provide the sub-3.15 evidence necessary to negate our long-term base/reversal count that basically contends the major, multi-year base/reversal process from Oct’14’s 3.18 low is identical to that that followed Sep 1998’s 1.96 low that led to 2006-07-08’s massive reversal higher.  We’re not saying that such a reversal will unfold in 2020, or even ’21 or ’22.  But we ARE saying that sub-3.60-area corn prices offer outstanding risk/reward merits to long-term commercial players from the bull side.  Today’s very short-term mo failure that defines a 3.38 low also offers a favorable and objective risk/reward play for even short-term traders.

These issues considered, traders are advised to move to a new bullish policy at-the-market (3.46) OB with a failure below 3.38 required to negate this specific call and warrant its cover.  Further gains above 3.57 will reinforce this call as well as a base/reversal count that could be major in scope, exposing potentially long-term gains thereafter.

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