RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The market’s failure to sustain losses below former 1.9735-to-1.9810-area support-turned-resistance and recovery above 06-May’s 2.0216 corrective high and our short-term risk parameter discussed in 08-May’s Technical Blog warns that the recent 2.0969 – 1.9264 sell-off attempt is just a 3-wave affair as labeled in the 240-min chart below.  Left unaltered by a relapse below Wed’s 1.9264 low, this 3-wave setback may be considered a corrective/consolidative structure that warns of a resumption of Dec-Apr’s major uptrend that preceded it.  Per such this 1.9264 low 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.

Rbob Gasoline Jun '19 240 Min Chart



Rbob Gasoline Jun '19 Daily Chart


The bottom line is that it’s difficult to say whether 22-Apr’s 2.0969 high completed 3- or 5-waves up from 26Dec18’s 1.4420 low, so traders need to flexible to either a (5th-Wave) continuation of this bull and a rejection of the upper recesses of the recent range and continuation of a broader peak/correction/reversal environment.  Indeed, 22-Apr’s 2.0969 high remains intact as a resistant cap and key longer-term risk parameter at a time when the sentiment/contrary opinion indicators are showing historically frothy levels typical of major peak/reversal conditions. In effect, the market has identified 2.0969 and 1.9264 as the key directional triggers heading forward and traders are advised to acknowledge the prospect of and be flexible to a breakout from this range in either direction.

This challenge also brings technical and trading SCALE into the equation, where short-term traders ore now OK to approach this market from a neutral-to-cautiously-bearish perspective with a failure below 1.9264 required to negate this call while long-term players are still OK to take a cautiously bearish stance with a recovery above 2.0969 required to negate that call.


Rbob Gasoline Jun '19 Weekly Chart



Finally, the monthly log chart below shows the market still wafting deep within the middle-half bowels of an 11-YEAER lateral triangle where the odds of aimless whipsaw risk should be approached as high on this long-term scale.  We’ve noted the 2.23-handle-area as the 0.618 progression of 2008 – 2012’s previous rally of this scale from 0.7850 to 3.4278 take from Feb’16’s 0.8975 low.  Thus far this market has failed to break this area.  Whether it tests this area again or breaks it remains to be seen.  What we DO know is that the market’s return to these relatively high prices amidst historically frothy sentiment levels has presented precarious peak/reversal conditions in the past.  Per such, it is imperative for the bull to SUSTAIN trendy, impulsive behavior higher to maintain a more immediate bullish count.  A failure below levels like 1.9264 will not only threaten a bullish count, but expose downside vulnerability that could be extensive.

These issues considered, shorter-term traders have been advised to move to a neutral/sideline position.  The market’s current position in the middle of the recent 2.0969 – 1.9264-range presents poor risk/reward merits from which to initiate directional exposure.  Long-term players remain OK toe maintain a cautious bearish policy with a recovery above 2.0969 required to negate this count and warrant its cover.


Rbob Gasoline Monthly Chart

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