The hourly chart below shows the area of former 123.15 resistance from 22-May holding as new support.  Further weakness below Wed’s 122.80 low will threaten the prospect that this week’s setback from 127.65 is another correction within the major uptrend and tilt the directional scales towards a developing peak/reversal environment that could be major in scope.  In this regard 122.80 is considered our new short-term risk parameter around which traders can objectively manage the risk of bullish exposure.

From a longer-term perspective it is not hard at all to find major threats to what has been a monstrous bull.  The prospect that the last-May/early-Jun resumption of this bull is the completing 5th-Waveof a major 5-wave Elliott sequence from 01-Feb’s 99.40 low is clear in both the daily log scale chart above and daily log close-only chart below.  However, commensurately larger-degree proof of weakness below 30-May’s 117.95 larger-degree corrective low or 26-May’s 118.875 corrective low close remains required to, in fact, break the major uptrend and confirm the bearish divergence in momentum on the scale necessary to conclude the rally is over and that a major correction or reversal lower has begun.

Complicit with a major peak/reversal-threat count is the fact that bullish sentiment remains stubbornly, historically and understandably bullish.  Such gross bullish sentiment is TYPICAL of all major peak/reversal environments.  But traders are reminded that sentiment is not an applicable technical tool in the absence of an accompanying bearish divergence in momentum needed to break the clear and present uptrend.  Herein lies the crucial importance of our longer-term risk parameters at 118.875 and/or 117.95.

These issues considered, a bullish policy remains advised with a failure below 122.80 required for short-term traders to move to the sidelines and longer-term players to pare bullish exposure to more conservative levels.  Subsequent weakness below 118.875 remains required for long-term players to jettison the position altogether and begin a new bearish policy where subsequent recovery attempts will then first be approached as corrective selling opportunities.  In lieu of such sub-122.80 weakness further gains should not surprise.