Thus far, the 240-min chart below shows the market sustaining losses below former 3.44-to-3.49-handle-area support-turned-resistance following last week’s clear break below this level consistent with our bearish count introduced in 01-Sep’s Technical Blog.  Yesterday’s relapse defines yesterday’s 3.4990 high as a specific level we now believe this market now needs to stay below to maintain an intermediate-to-longer-term bearish count.  A recovery above 3.4990 won’t necessarily negate a broader bearish count, but we believe it will compromise the risk/reward metrics of such a count enough to warrant moving back to a neutral/sideline position.  Per such, we advise traders to tighten short-term bear risk from 12-Sep’s 3.7050 corrective high to yesterday’s 3.4990 high.

Contributing to this decision to tighten bear risk “down here” is the market’s proximity to and rejection thus far of the extreme lower recesses of the past quarter’s range.  If there’s a time and place for this market to revert to the middle-half bowels of this range and defer or negate a broader peak/reversal count, it is here and now and we will gauge this reversion around yesterday’s 3.4990 high.

From a long-term perspective, traders are reminded that this market is still coming off a ton of peak/reversal-threat behavior that includes:

  • a bearish divergence in WEEKLY momentum amidst
  • historically extreme bullish sentiment/contrary opinion
  • a textbook complete and massive 5-wave Elliott sequence from Apr’20’s 0.6724 low and
  • the market’s gross failure thus far to sustain this year’s earlier bust-out above 2008’s previous all-time high at 4.1586.

This remains a unique and compelling list of technical facts that warns of a peak/reversal count that could/would be massive is scope and that requires a recovery above Jun’s 4.6070 to negate.  Against this backdrop, recovery attempts like Aug’s and this week’s easily fall within the bounds of corrections.  This said, “early” in major peak/reversal processes, 2nd-wave corrections of various degrees can be more extensive in scope, and this is what we believe might be exposed if this market can recoup yesterday’s 3.4990 high that would then become an initial counter-trend high and confirm a bullish divergence in momentum.

These issues considered, a cautious bearish policy and exposure remain advised with a recovery above 3.4990 required to defer or threaten this call enough to warrant moving to a neutral/sideline position.

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