For the past couple months we’ve questioned this market’s upside potential because of it’s proximity to the extreme upper recesses of its past TWO YEAR range and the painfully apprehensive manner in which it has approached the pivotal upper-1.34-handle-area resistant cap in the contract. And in some respects, we still do. But with the underlying cash market this week closing above its 31-Aug 1.3371 that’s also a new 2-1/2-YEAR high and market-defined corrective lows and risk parameters left in the wake of the past few weeks’ uptrend, we have to give the bull its due ahead of what could surprising gains in the weeks, months and perhaps even quarters ahead.
The weekly log active-continuation chart of the contract below shows the pertinence of the 1.3385-to-1.3510-range that has capped this market for the past two years. A clear break above 1.3510 exposes a vast chasm totally devoid of any technical levels f merit shy of Apr’18’s 1.4413 high. The current 67% reading in the Bullish Consensus (marketvane.net)- its highest level in more than SIX YEARS- cannot be ignored as a threat to the bull as, indeed, such frothiness is typical of major PEAK/reversal conditions. However, traders are reminded that sentiment/contrary opinion is not an applicable technical tool in the absence of an accompanying confirmed bearish divergence in momentum. Additionally and in support of potentially sharp gains, our TRJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC has recently eroded to a non-bull-threatening 42% level.
On an even broader scale, the monthly log chart below shows the market on the cusp of confirming a bullish divergence on as big a scale as it gets. A break of Apr’18’s 1.3510 major corrective high will, in fact, break at least the downtrend from Apr’18’s 1.4413 high and may have even completed a massive 13-YEAR falling-wedge from Nov’07’s 2.1138 high. This would/could be an extraordinarily bullish setup that we’d would/should produce steep, sustained gains above 1.3510 in a new secular bull market. Traders need to keep this requirement/expectation of such a bullish count when we start addressing the risk “up here” of a bullish policy.
The daily chart of the contract above shows the market’s grinding, apprehensive approach to the pivotal 1.3500-area. IF IF IF this market’s on the verge of a new secular bull, it would/should be expected to BEHAVE LIKE ONE with increasingly obvious, sustained, steep gains somewhere along the line. Minimally, we would NOT expect it to fail below recent corrective lows like 12-Nov’s 1.3108 larger-degree corrective low and perhaps not even below yesterday’s 1.3446 smaller-degree corrective low. These two levels represent our new long- and short-term risk parameters from which a bullish policy and exposure can be objectively based and managed.
The daily close-only chart of the underlying cash market shows this week’s break above 31-Aug’s 1.3371 high. This is a new 2-1/2-YEAR high. Per any broader bullish count, this market is expected to not only NOT fail below recent corrective lows like 1.3120 and even 1.3315, but to start moving higher in an increasingly obvious, trendy, impulsive manner. Its failure to do so will defer or threaten a broader bullish count and expose another intra-two-year-range corrective relapse that could be extensive.
Finally, on a short-term basis, the 240-min chart below shows this morning break above Tue’s 1.3446 high that reaffirms the uptrend and leaves yesterday’s 1.3287 low in its wake as the latest smaller-degree corrective low it now is require to sustain gains above to maintain a more immediate bullish count. Its failure to do so will confirm a bearish divergence in short-term momentum and expose at least an interim correction of the past month’s rally from 02-Nov’s 1.2855 low.
These issues considered, traders are advised to move to a cautious bullish policy and exposure from at-the-market (1.3450 OB) with a failure below 1.3287 required to negate this specific count and warrant its cover. In lieu of at least such sub-1.3287 weakness, further and possibly extraordinary gains should not surprise.