RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

In 08-Mar’s Technical Blog we questioned the bull’s resolve “up here” against a backdrop of waning upside momentum, an arguably complete wave count up and historically bullish market sentiment that warn of a peak/reversal threat that could be major in scope. 06-Mar’s bearish divergence in short-term momentum identified that day’s 86.60 high as one of developing importance as a short-term risk parameter from which non-bullish decisions like long-covers and cautious bearish punts could be objectively based and managed. A week-and-a-half on the 240-min chart shows the market’s erosion to the lower recesses of the past couple weeks’ range, where a break below 06-Mar’s 81.71 low would confirm at least the intermediate-term trend as down. But against the peak/reversal-threat backdrop touched on above and detailed below, traders are advised to beware a sub-81.71 break that could see protracted losses thereafter.
As always, ya can’t conclude a major peak/reversal from only smaller-degree weakness like 06-Mar’s bearish divergence in short-term mo. Indeed, if 06-Mar’s 86.60 high completed what appears to be a textbook 5-wave Elliott sequence up from last Jul’s 66.55 low labeled in both the daily (above) and weekly (below) log scale charts, commensurately larger-degree weakness below 15-Feb’s 76.44 larger-degree corrective low and key risk parameter remains required. 76.44 is THE level this market needs to break to, in fact, break the 8-month uptrend. This leaves a chasm between 06-Mar’s 81.71 low we detailed above and 76.44.

IF this month’s relapse is just another bull market correction, then we’d expect the market to fail to sustain sub-81.71 levels if/when it breaks it. Conversely, if the market is in the very early stages of a broader peak/reversal environment, an impulsive break below an 81.71 initial (1st-Wave) counter-trend low may not look back. Bearish decisions on the immediate break below will give traders- even long-term ones- an early leg up on a broader peak/reversal count, not having to wait for commensurately larger-degree weakness below 76.44. Of course, this benefit comes in direct exchange for whipsaw risk.

The weekly chart below also shows waning upside momentum (confirmed below 76.44) amidst historically bullish sentiment. With an arguably complete wave count this presents a unique, powerful and opportunistic combination of factors that may become much more obvious the momentum the market breaks 81.71.
From an even broader perspective the monthly log active-continuation chart below shows the market’s proximity to the upper-quarter of a 97-to-54-range that has confined it for the past six years. If there’s a time and place for this market to be vulnerable to another intra-range swoon, it’s here and now.

While we discuss some similar and interesting peak/reversal threat facts in the Dec contract below, traders are advised to toggle directional biases and exposure in the May contract around 91.70, being neutral-to-cautiously-bullish above it and swinging around to a cautious bearish policy below it. And again, if something bigger to the bear side is developing, a sub-81.70 break should be characterized by trendy, impulsive and sustained losses below that point that should become increasingly obvious. The market’s failure to behave this way with a countering bullish divergence in mo could easily resurrect the major bull.


RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.