Posted on Aug 16, 2022, 07:37 by Dave Toth

With yesterday’s slips back below 05-Aug’s 87.01 low, the market has rendered last week’s recovery attempt another 3-wave and thus corrective affair within the near-30% decline from 14-Jun’s 123.68 high.  This resumed slide leaves Thur’s 95.05 intra-day high in its wake as the latest smaller-degree corrective high and the new minimum level this market now needs to recoup to threaten the 2-month downtrend and expose at least an intermediate-term corrective recovery.  Per such, we’re defining this 95.05 level as our new short-term risk parameter from which shorter-term traders can objectively rebase and manage the risk of a still-advised bearish policy and exposure.

On a daily basis, the POTENTIAL for a bullish divergence in momentum is clear in both the high-low chart above and close-only chart below.  An intra-day recovery above at least 95.05 and/or a close above at least 93.99 is minimally required to raise the odds of a correction.  But this would still leave the marker BELOW a ton of former price action from this year that would/could still weigh on it as a new key resistance candidate.

Indeed, the daily close-only chart below shows this market getting comfortable at levels below the 95-handle-area that supported it for FOUR MONTHS.  Herein lies the rationale for our longer-term bear risk parameters at 29-Jul’s 98.30 larger-degree corrective high close and that day’s 101.88 intra-day high.  To truly break Jun-Aug’s downtrend, these are the longer-term bearish risk parameters this market has to recoup. Once again, this emphasizes the importance of technical and trading SCALE commensurate to one’s personal risk profile in trying to navigate this market and identify risk.  We cannot objectively conclude a larger-degree corrective rebound from proof of only shorter-term strength above last Thur’s smaller-degree corrective highs.

From a long-term perspective, the factors on which our major peak/reversal count is predicated remain intact until and unless 14-Jun’s 123.68 high is taken out:

  • a confirmed bearish divergence in WEEKLY momentum (above)
  • the market’s total rejection of the upper-quarter of this market’s historical range (below) amidst
  • historically frothy sentiment/contrary opinion levels
  • a textbook complete 5-wave Elliott sequence from Aug’21’s 61.86 low weekly close that
    • spanned a virtually identical length (i.e. 1.000 progression) to Apr’20 – Jun’21’s preceding 17.18 – 75.19 5-wave rally that
    • completes a major 3-wave and thus corrective (B-Wave) rally from the 2020 low

These issues considered, a bearish policy and exposure remain advised with a recovery above 95.05 and/or a close above 93.99 required for shorter-term traders to move to the sidelines.  Commensurately larger-degree strength above 29-Jul’s 101.88 intra-day high and/or a close above 98.30 is required for longer-term commercial players to follow suit.  In lieu of such weakness, further and possibly accelerated losses remain expected.

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