RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

The extent and impulsiveness of the relapse from 26-May’s 120.195 high is sufficient to define that high as the end or upper boundary of a clear 3-wave recovery from 09-May’s 116.21 low in the Sep contract.  Left unaltered by a recovery above 120.195, this 3-wave recovery is considered a corrective/consolidative structure that is consistent with our long-term bearish count and warns of an eventual resumption of the secular bear market to new lows below 116.21 in this contract and below 117.085 on an active-continuation basis.

On a short-term basis, the 240-min chart below shows Fri and today’s continuation of this slide that leaves Thur’s 118.31 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recoup to confirm a bullish divergence in short-term momentum, arrest the slide and expose an intra-range rebound.  Per such, this 118.31 level serves as our new short-term risk parameter from which shorter-term traders with tight risk profiles can objectively rebase and manage the risk of a continued bearish policy and exposure.

On a long-term basis and as discussed in 12-May’s Technical Webcast following 11-May’s bullish divergence in momentum, the ensuing recovery attempt was advised to be approached as a mere correction against the magnitude of the secular bear market.  Today’s weakness reinforces this long-term bearish count and now highlights 26-May’s 120.31 high on an active-continuation basis (120.195 basis the Sep contract) and that day’s 2.702% low on a 10-yr yield basis below as our new key long-term risk parameters from which a resumed bearish policy and exposure can be objectively rebased and managed by longer-term institutional players.

As 09-May’s key 117.085 low in the contract and 3.203% high in yield remain intact, we cannot ignore the prospect for further aimless, consolidative chop within the past month’s range.  But until and unless this market can recoup 26-May’s 120.31 high in contract price and/or break below 2.7025 low in yield, a resumption of the secular bear trend in the contract and rise in 10-yr rates is fully anticipated.

The weekly active-continuation chart of the contract below shows the sheer magnitude of the secular bear market and the thus far paltry mid-May recovery attempt that falls well within the bounds of a mere correction within that secular bear trend.

These issues considered, a bearish policy and exposure remain advised with a recovery above 118.31 required for shorter-term traders to move to the sidelines and commensurately larger-degree strength above 120.195 in the Sep contract for long-term players to follow suit.  In lieu of such strength, further and possibly accelerated losses are anticipated, including a resumption of the secular bear trend to new lows below 117.085.

DEC23 EURODOLLARS

The technical construct and expectations for the Dec23 eurodollar contract are identical to those detailed above in T-notes with smaller- and larger-degree corrective highs and short- and long-term risk parameters identified at 96.835 and 97.105, respectively.

In lieu of a recovery above at least 96.835 and preferably 97.105, a resumption of the secular bear trend to new lows below 96.42 is expected and traders should re-position according to their personal risk profiles.

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.