Posted on Dec 20, 2023, 07:41 by Dave Toth

We always want to beware waning downside momentum at the lower extremes of a range that are often times the precursor to another intra-range rebound.  And that’s exactly what the hourly chart below is showing.  As a result of this week’s continued but thus far struggling continuation of the past couple weeks’ decline, the market has defined last Fri’s 225.25 high as the latest smaller-degree corrective high, a level we’d expect the market to sustain losses below to maintain a more immediate bearish count and ultimate break below 28-Nov’s 221.25 low needed to reinstate the secular bear trend.  A recovery above 225.25 will confirm the bullish divergence in short-term momentum to the point of non-bearish action like short-covers by shorter-term traders with tighter risk profiles.  Per such, we’re defining 225.25 as our new mini parameter from which short-term traders can objectively rebase and manage the risk of a bearish policy and exposure.

The relevance of 28-Nov’s 221.25 low is obvious.

On a broader scale, the daily (above) and weekly close (below) log scale charts of the Mar contract show the magnitude and dominance of the secular bear trend.  Against this major bearish backdrop, recovery attempts are advised to first be approached as corrections ahead of subsequent losses.  To threaten this longer-term bearish call, a recovery above 06-Dec’s 234.75 larger-degree corrective high and area of former support-turned-resistance is minimally required, so we’re trailing our longer-term bear risk parameter pertinent to longer-term commercial players to this level.  Until/unless this 234.75 level is recouped, we anticipate a (5th-Wave) resumption of the major bear to new lows below 221.25.  And this count may include an intra-range bounce if the market confirms a bullish divergence in short-term mo above 225.25

Lastly, the weekly log active-continuation chart below shows the market still holding above 31-May’s 215.25 low in the then-prompt Sep contract.  We don’t want to ignore this supportive fact, so herein lies the importance of 06-Dec’s 234.75 larger-degree corrective high as a longer-term bear risk parameter.

These issues considered, a bearish policy remains advised with a recovery above 225.25 required for short-term traders to move to a neutral/sideline position to circumvent the heights unknown of another intra-corrective-range bounce.  Commensurately larger-degree strength above 234.75 is required for longer-term commercial players to follow suit.  In lieu of such strength, a continuation of the secular bear market to new lows below 221.25 should not surprise.

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