Overnight’s recovery above Tue’s 10.37 initial counter-trend high confirms a bullish divergence in very short-term momentum that defines Tue’s 10.05 low as one of developing importance, especially in light of a prospectively major base/reversal threat introduced in 30-Apr’s Technical Blog.  Per such, and while commensurately larger-degree strength above 01-May’s 11.01 high is required to confirm the reversal and expose the new long-term trend as up, Tue’s 10.05 low may be used as a micro risk parameter from which non-bearish decisions like short-covers and new bullish exposure can be objectively based and managed.

This longer-term base/reversal count remains predicated on:

  • an arguably complete 5-wave Elliott sequence down from 12-Feb’s 15.90 high as labeled above
  • an “outside WEEK” (lower low, higher high and higher close than last week’s range and close)
  • the market’s thus far gross failure to sustain the past couple weeks’ break below Aug’18’s critical 9.91 low amidst
  • an historically bearish 12% level in the Bullish Consensus (marketvane.net) measure of market sentiment not seen since Oct 2001!

This is an extraordinarily compelling list of base/reversal factors that warn a potentially major reversal higher.  A break above 11.01 will confirm this count still further and expose potentially sharp, sustained gains thereafter.

In sum, traders are advised to move to an increasingly bullish policy and exposure with a failure below at least 10.05 required to defer this call and warrant paring or neutralizing exposure.  Full bullish exposure is advised on the immediate break above 11.01.

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
For more information on RJO Market Insights, contact your broker or RJO representative.