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The market’s failure overnight below Tue’s 3.8370 minor corrective low and short-term risk parameter discussed in yesterday’s Technical Webcast confirms a bearish divergence in short-term momentum. This mo failure defines yesterday’s 3.9670 high as the END of what appears to be a textbook 5-wave Elliott sequence up from 24-May’s 3.5450 low and thus our new short-term parameter from which the risk of non-bullish decisions like long-covers and cautious bearish punts can now be objectively based and managed.
The prospect that the past month’s rally is a 5-wave sequence poses a theoretical dilemma for any longer-term bearish count we’ll discuss below because corrections (within a broader bear trend) are not 5-wave sequences, they’re 3-wave structures. Again, “theoretically”, this suggests that the past month’s recovery is either only an (A-Wave) part of a correction that’s got more to go OR the 1st-Wave of a much broader bullish count.
Understanding over time that Elliott theory and practice can vary greatly, traders need to consider two upcoming requirements for a broader bullish count to be reinforced:
- if there’s something broader to the bull side in store, any relapse attempts must be 3-wave corrective events with a countering bullish divergence in short-term mo needed to arrest the short-term downtrend, and
- most pointedly, the bull needs to recoup yesterday’s 3.9670 high.
Until/unless these two requirements are met, traders are urged not to underestimate the extent to which this market might correct OR REVERSE lower.
![](https://rjofutures.rjobrien.com/images/2023/06/Copper-240-Min-Cont.gif)
![](https://rjofutures.rjobrien.com/images/2023/06/Copper-Act-Daily-Cont.gif)
The reason we’re concerned with potentially much greater downside potential is that from a longer-term perspective, the daily log scale high-low chart above and daily log close-only chart below show this YEAR’S longer-term trend as still arguably DOWN. Moreover, the past month’s recovery attempt has thus far stalled around the immediate neighborhood of the 61.8% retrace of Apr-May’s portion of this year’s downtrend. On a closing basis below, Wed’s 3.9050 high was only 19 ticks away from the (3.9031) 61.8% retrace of Apr-May’s 4.1275 – 3.5655 decline. Combined with former 3.87-handle-area support from mid-Mar as a new resistance area, it’s not hard to see the importance of this week’s highs and resistance as a short-term but key area around which to base non-bullish decisions.
Yes, thus far this year’s entire sell-off attempt has only unfolded into a 3-wave structure that could be just a correction ahead of a resumption of Jul’22 – Jan’23’s uptrend that preceded it. But if this is the case, we have those two requirements listed above to reinforce such a count. If it’s not, and if the past month’s recovery is a correction within this year’s broader and still-developing bear trend, we could see protracted losses in the months and even quarters ahead.
![](https://rjofutures.rjobrien.com/images/2023/06/Copper-Act-Daily-Cont-2.gif)
Lastly and on an even broader scale, the weekly log active-continuation chart below shows the magnitude of 2022’s reversal as well as Jul’22 – Jan’23’s 3-wave and thus corrective structure that remain consistent with a massive, multi-quarter PEAK/reversal-threat process that, if correct, warns of an eventual resumption of last year’s downtrend to eventual new lows below 3.13. Against this long-term backdrop, there is much riding on the MANNER in which this market trades lower in the period immediately ahead. For IF a broader bearish count is what the market has in store, then we would expect to see sustained, trendy, impulsive price action to the downside and NOT labored 3-wave corrective behavior from this week’s high.
These issues considered, shorter-term traders have been advised to neutralize bullish exposure and are further advised to consider cautious bearish exposure with a recovery above 3.9670 required to negate this specific count and warrant its cover. Longer-term commercial players remain advised to maintain a bearish policy and exposure with a recovery above 3.9670 required to pare exposure to more conservative levels and commensurately larger-degree strength above 4.1275 required to negate this call altogether and warrant neutralizing remaining exposure. In lieu of a recovery above 3.9670, further and possibly protracted losses should not surprise.
![](https://rjofutures.rjobrien.com/images/2023/06/Copper-Act-Weekly-Cont.gif)