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Since late-Aug/early-Sep’s resumption of the summer swoon, we’ve had 13-Aug’s 305.4 corrective high as our longer-term risk parameter to what we still believe is just an interim bearish count. As a result of the extent of this week’s relapse detailed in the hourly chart below, we’re considering Fri’s 304.7 high as our new longer-term risk parameter to a bearish policy for longer-term players. While 09-Sep’s 292.0 low remains intact however, it remains as an objective shorter-term risk parameter the market still needs to break to mitigate any base/correction/reversal threat and reinstate the 3-month downtrend. In effect, we believe the market has identified 292 and 304.7 as the key directional triggers heading forward.
![](https://rjofutures.rjobrien.com/images/2019/09/soybean-meal-dec19-60-min-chart-1.gif)
There are three reasons we believe Fri’s 304.7 high serves as a relatively tight but key longer-term risk parameter to a continued bearish policy by longer-term players:
- simply the broader 3-month downtrend as a backdrop
- the 3-wave and thus corrective sub-division of the 292 – 304.7 recovery as labeled in the hourly chart above and
- the market’s respect thus far for the (304.1) 38.2% retrace of Jul-Sep’s (prospective 3rd-Wave) decline from 323.8 to 292.0 as shown in the daily chart below.
IF the 3-month downtrend is still intact, it needs to sustain levels below 304.7. Its failure to do so will confirm a bullish divergence in momentum, break this downtrend and exposure a base/reversal threat that we believe could be major in scope and warrant an immediate switch to a new and aggressive bullish policy.
![](https://rjofutures.rjobrien.com/images/2019/09/soybean-meal-dec19-daily-chart-1.gif)
We made reference to an “interim” bearish count above because we believe that on a major, long-term basis, this summer’s slide is just a corrective retest of May’s 283.1 low within an even broader, multi-year base/reversal process from Feb’16’s 258.9 low shown in the weekly log active-continuation chart below. Integral to this long-term bullish count are the:
- market’s continued respect for and rejection of the lower-quarter of the multi-year lateral range
- May-Jun’s bullish divergence in MONTHLY momentum that, in fact, broke May’18 – May’19’s major bear trend
- base/reversal-threat behavior that thus far is virtually identical to Jun-Aug’17’s base/reversal circled in green below and, most indicting,
- still historically bearish sentiment/contrary opinion levels that have warned of and accompanied every past major base/reversal.
If this long-term base/reversal count is wrong, all the bear has to do is, at least, break May’s 283.1 low that serves as our major long-term risk parameter. This said, traders are reminded that sentiment/contrary opinion is not an applicable technical tool until an accompanying bullish divergence in momentum breaks the downtrend. Herein lies the crucial importance of Fri’s 304.7 high as a relative tight but key risk parameter to bearish exposure “down here”.
These issues considered and even though 09-Sep’s 292.0 low and short-term risk parameter remains intact, shorter-term traders are advised to maintain or move to a neutral-to-cautiously-bearish policy with a recovery above 304.7 required to reverse into a new bullish policy. Long-term players remain advised to maintain a bearish policy with a recovery above 304.7 required to reverse into a new bullish policy. In lieu of such 304.7+ strength, a resumption of the 3-month downtrend to new lows below 292.0 should not surprise. Whether such a sub-292.0 break continues on to break that key 283.1 low however will be interesting to see.
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