RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Aug 18, 2022, 08:52 by Dave Toth

While the daily log close-only chart below doesn’t show it, this morning’s break below 01-Aug’s 16.630 intra-day low confirms a bearish divergence in daily momentum.  This mo failure not only defines 05-Aug’s 17.375 high as the end of the recovery from 06-Jul’s 16.125 low, but also the end of what looks to be a 3-wave structure as labeled.  Left unaltered by a close above 17.375, this 3-wave recovery is considered a (B- or 2nd-wave) CORRECTION that warns of a (C- or 3rd-Wave) resumption of May-Jul’s INITIAL decline within a peak/reversal count that could be major in scope.  This 3-wave corrective recovery attempt satisfies the critical third of our three key reversal requirements following 1) early-Jun’s bearish divergence in momentum and 2) proof of 5-wave impulsive behavior in the initial counter-trend decline.  Per such, we’re defining 17.375 as our new key risk parameter from which a bearish policy and exposure can be objectively based and managed ahead of what could be protracted losses below 06-Jul’s 16.125 low.

05-Aug’s 17.455 intra-day high is shown in the weekly log chart of the Sep contract and the same bear risk parameter from which a bearish policy and exposure can be objectively based and managed.  This perspective shows historically frothy levels of market sentiment when this market was first topping out in mid-May that continues to be consistent with a major peak/reversal-threat environment.  To negate this major bearish call, this market now needs to recoup at least 17.455 and certainly May’s 18.145 high.  Until and unless such strength is shown, we believe a trendy, impulsive plunge to levels potentially well below Jul’s 16.05 low lies directly ahead.  The fact that this topping behavior stems from the extreme upper recesses of this market’s historical range on a monthly log close-only basis below contributes to this bearish call.

In sum, traders are advised to move to a new bearish policy and exposure at-the0-maerket (16,55) with a recovery above 17.455 required to negate this call and warrant its cover.  In lieu of such strength, further and possibly steep, even relentless losses are expected in the weeks and months ahead.

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