On the tiniest of scales, yesterday’s recovery above 04-Aug’s 178.65 initial counter-trend high detailed in the 240-min chart below confirms a bullish divergence in momentum. On the heels of late-Jul’s relative plunge, early-Aug’s piddly recovery attempt falls well within the bounds of a mere corrective hiccup ahead of a resumption of this relative plunge. Nonetheless, until or unless mitigated by a relapse below 02-Aug’s 171.60 low, further corrective rebound OR the resumption of the secular bull trend are expected. Per such, this 171.60 level serves as our new short-term risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed by shorter-term traders with tighter risk profiles.
The compelling thing about last week’s 171.60 low and admittedly short-term risk parameter is that it comes against the backdrop of a massive, arguably accelerating secular bull trend where the relapse from 26-Jul’s 215.20 high can, at this point, only be considered another correction within the secular bull. Against the backdrop of this secular bull trend, the daily log scale chart above shows the area marked by the (170.50) 61.8% retrace of Jul’s 147.65 – 215.20 rally and 168.65 former resistance-turned-support as a logical support candidate. As yesterday’s bullish divergence in short-term momentum rejected/defined a level (171.60) just above this pivotal area, an acute risk/reward opportunity from the bull side is presented. For IF late-Jul’s exaggerated relapse/correction ended at 171.60, a resumption of the secular bull trend to new highs above 215.20 would be expected. That’s quite the reward for a risk to levels just below 171.60.
From an even longer-term perspective, the monthly log chart below shows the magnitude of this secular bull trend. MINIMALLY, commensurately larger-degree weakness below 06-Jul’s 147.65 larger-degree corrective low remains required to break even the portion of the bull from Nov’20’s 102.15 low, let alone threaten the 27-month secular bull trend.
These issues considered, shorter-term traders whipsawed out of bullish exposure following 30-Jul’s bearish divergence in short-term momentum are advised to return to a bullish policy and exposure from the 178.65-area OB with a failure below 171.60 required to negate this specific all and warrant its cover. Longer-term commercial players remain advised to maintain a bullish policy with a failure below 168.65 required to defer or threaten this call enough to warrant its cover. In lieu of weakness below at least 171.60 and preferably below 168.65, a resumption of the secular bull trend is anticipated.