RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Fri and overnight’s continued recovery above Thur’s 1.2620 high reaffirms the suspected corrective rebound introduced in 28-Jul’s Trading Strategies Blog following 27-Jul’s bullish divergence in short-term momentum.  This latest spate of strength leaves Thur’s 1.2552 low in its wake as the latest smaller-degree corrective low the market now should be expected to sustain gains above to maintain a more immediate bullish count.  Its failure to do so will not only break the intermediate-term uptrend, but also render the recovery from 26-Jul’s 1.2414 low the 3-wave and thus corrective affair we suspect it is ahead of a resumption of the major downtrend to new lows below 1.2414.  In this regard we are considering 1.2550 our new short-term risk parameter from which shorter-term traders with tight risk profiles can rebase and manage the risk of non-bearish decisions like short-covers and cautious bullish punts.

Canada Dollar 240 min Chart

Canada Dollar Daily Chart

It’s debatable whether the current rebound is of a sufficient scale to conclude 26-Jul’s 1.2414 low as the END of the broader decline from 05-May’s 1.3794 high.  However, the combination of:

  • the market’s rejection thus far of 2016’s 1.2460 major low
  • return to historically bullish sentiment accorded the CAD futures and
  • Fibonacci fact that the decline from May’s 1.3794 high is exactly 0.618-times (i.e. 0.618 progression) the length of early-2016’s 1.4691 – 1.2460-decline

is a compelling one that warns us to beware a larger-degree correction or reversal until the market stems the rebound with a confirmed bearish divergence in short-term mo below a level like 1.2550.

These issues considered, shorter-term traders are advised to maintain a cautious bullish stance from 1.2475 OB recommended in 28-Jul’s Trading Strategies Blog and trail protective sell-stops to 1.2550.  Longer-term players are advised to pare bearish exposure to more conservative levels with further gains above 1.2945 required to jettison the position altogether.  A relapse below 1.2550 is required to stem the rebound and resurrect our longer-term bearish count to new lows below 1.2414.

Canada Dollar Weekly Chart

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