RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Yesterday afternoon and today’s slip below 07-Jan’s 117.14 corrective low and mini risk parameter discussed in Mon’s Technical Webcast confirms a bearish divergence in very short-term momentum.  Against the backdrop of the secular bull market, this admittedly minor momentum failure hardly registers and is of a grossly insufficient scale to conclude anything more than another interim corrective hiccup ahead of resumed gains.  But it is sufficient to identify yesterday’s 123.68 high as one of developing importance and a mini risk parameter from which traders can objectively base non-bullish decisions like long-covers and cautious bearish punts.  And given some pertinent ancillary factors discussed below, traders are advised to beware more protracted losses until and unless this market negates such with a recovery above 123.68.

These ancillary peak/reversal-threat factors include:

  • the market’s close proximity to early-Mar’s highs on both a daily bar chart above and close-only basis below
  • the prospect that the rally from 11-Apr’s 95.18 low close is a complete 5th-wave diagonal triangle as labeled below
  • the prospect that Apr-Jun’s rally is the completing 5th-Wave of a sequence up from Aug’21’s 62.14 low weekly close labeled above that
  • came within 0.31-CENTS of equaling the length (i.e. 1.000 progression) of Apr’20 – Jun’21’s 16.94 – 75.16 rally that
  • could be a complete and monstrous 3-wave rally from Apr’20’s low
  • the market’s proximity to the upper-quarter of its historical range on a monthly basis below amidst
  • historically frothy sentiment/contrary opinion levels that warned of and accompanied virtually every major correction or reversal lower.

TO BE SURE, there is no way whatsoever to conclude a broader top from proof of the past couple days’ piddly setback.  Commensurately larger-degree weakness below the Mar/Apr lows (95.18 on a closing basis and 92.93 on an intra-day basis) remains required to break the secular bull trend and expose a peak/reversal threat that could be major in scope.  But decision-making flexion points anywhere in the middle-half bowels of the past quarter’s lateral range lacks practicality and is not optimum by any stretch of the imagination.  Per such, we believe the past couple days’ bearish divergence in admittedly very short-term momentum, combined with the ancillary factors listed above, questions the risk/reward merits of a continued bullish policy “up here” enough for all but the longest-term commercial players to move to a neutral-to-cautiously-bearish stance with a recovery above 123.68 required to negate this call, re-expose the bull and potentially steep gains thereafter.  Until and unless such 123.68+ strength is shown, further lateral-to-lower, and possibly surprisingly lower prices are anticipated.

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