RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The market’s failure overnight and this morning to sustain Mon’s losses below Mon’s 1.2770 corrective high and short-term risk parameter discussed in Mon’s Technical Blog confirms a bullish divergence in momentum that defines Mon’s 1.2638 low as the END of not only a 5-wave Elliott sequence down from 08-Jun’s 1.2979 high, but possibly the end of a 3-wave affair down from 18-May’s 1.3049 high labeled in the 240-min chart below.  Left unaltered by a relapse below 1.2638, this 3-wave sell-off attempt may be considered a corrective/consolidative event consistent with our longer-term bullish count and re-expose this year’s developing uptrend to eventual new highs above 1.3050.  In this regard Mon’s 1.2638 low is considered our key new risk parameter from which a continued or resumed bullish policy and exposure can be objectively rebased and managed for what could be an outstanding risk/reward opportunity.

Pound Index 240 min Chart

The prospect that the sell-off attempt from 18-May’s 1.3049 high to Mon’s 1.2638 low THUS FAR is crystal clear in the daily chart below.  Since mid-Apr’s explosive rally above the then-prior four months’ resistance between 1.2775 and 1.2617, we have referred to this former resistance range as a new support candidate.  The (1.2626) 61.8% retrace of Apr-May’s 1.2365 – 1.3049 rally contributes to this candidacy that is reinforced by this morning’s admittedly short-term bullish divergence in mo.

Within the context of our long-term base/reversal count such a 3-wave relapse attempt is considered fitting and, if correct, warns of a trendy, impulsive resumption of the 5-month uptrend to new and potentially steep highs above 1.3050.  A failure below 1.2638 is now required to threaten this call enough to warrant a move to a neutral/sideline policy.

Pound Index Daily Chart

Pound Index Weekly Chart

Traders are reminded of the technical factors on which our major base/reversal count is predicated:

  • a confirmed bullish divergence in WEEKLY momentum amidst
  • historically bearish sentiment not seen since 2001 and
  • an arguably complete 5-wave Elliott sequence down from Jul’14’s 1.7192 high.

The market has yet to provide the evidence necessary to refute this bullish call that could easily produce gains to the 1.35-to-1.38-range (form key support from 2009-to-Jun’16 and new resistance candidate) in the weeks and months immediately ahead.  And as a result of today’s bullish divergence in momentum discussed above, we can objectively tailor the risk of a continued or resumed bullish policy to levels just below Mon’s 1.2638 low.

In sum, longer-term players remain advised to maintain a bullish position with a failure below 1.2638 required to negate this call and warrant its cover.  Shorter-term traders advised to take profits on longs from 1.2850 at 1.2945 in 08-Jun’s Trading Strategies Blog are advised to return to a bullish policy and first approach setback attempts to 1.2760 OB as corrective buying opportunities with a failure below 1.2638 required to negate the call.  In lieu of such sub-1.2638 we anticipate further and possibly steep gains in the days, week and perhaps even months ahead.

Pound Index Monthly Chart

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