This morning’s recovery above last Wed’s 5.36 minor corrective high and our short-term risk parameter discussed in Fri’s Technical Blog confirms a bullish divergence in short-term momentum that defines Fri’s 5.07 low as the end of the relapse from 01-Jul’s 6.10 high. Per such, this 5.07 level not only 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, the fact that this short-term mo failure stems from the extreme lower recesses of the past couple months’ range resurrects the major correction-vs-reversal debate down from 07-May’s 6.38 high. Until and unless the market relapses below 5.07, at least another intra-range rebound is expected and possibly a resumption of the secular bull trend.
The fact that today’s bullish divergence in short-term mo stems from the extreme lower recesses of the past couple months’ range is crucial for any longer-term bullish count as it maintains the prospect that the merely lateral price action down from 07-May’s 6.38 high is 3-wave corrective/consolidative. As recently discussed, a break below 26-May’s 5.00 low and key risk parameter remains required to tilt the longer-term directional scales in favor of a major reversal. Now, a short-term failure below 5.07 will raise the odds of a sub-5.00 failure. UNTIL at least such sub-5.07 weakness is proven, another intra-range corrective rebound OR a resumption of the secular bull trend is acknowledged.
These issues considered, traders are advised to move to a cautious bullish policy and exposure from current 5.35-area levels OB are advised with a failure below 5.07 negating this specific count and warranting its immediate cover ahead of resurrected odds of a major reversal below 5.00. In lieu of such sub-5.07 weakness, lateral-to-higher prices straight away should not surprise, including the possibility of a resumption of the secular bull trend.