RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

USD INDEX

Today’s break below last week’s 98.50 low confirms our suspicions that last week’s recovery attempt was merely corrective within our major peak/reversal count introduced in 31-Jan’s technical Blog.  As a direct result of this resumed weakness the 240-min chart below shows that the market has identified 11-May’s 99.89 high as the latest smaller-degree corrective high and new short-term risk parameter it is minimally required to recoup to threaten this bearish call.  Per such 99.90 is considered our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a still-advised bearish policy.

Dollar Index 240 min Chart

Dollar Index Daily Chart

Today’s relapse below last week’s 98.50 low nullifies the bullish divergence in momentum resulting from 09-May’s recovery above 99.47 and confirms the recovery attempt as a corrective/consolidative event consistent with a broader bearish count.  10-Apr’s next larger-degree corrective high at 101.34 remains intact as our key long-term risk parameter the market is required to recoup to render this year’s entire relapse from 03-Jan’s 103.82 high a 3-wave corrective affair that wold then re-expose the secular bull.

As discussed many times since late-Jan our major peak/reversal count is predicated on the following technical facts:

  • gross failure to sustain Nov-Dec’16 gains above huge former resistance from the 100.00-area
  • confirmed bearish divergence in momentum that broke the May’16 – Jan’17 uptrend
  • historically bullish sentiment.

Perhaps the most indicting evidence against the bull is market sentiment.  In addition to wafting around historically frothy levels since early-Jan, as recently as mid-Apr the RJO Bullish Sentiment Index posted a new 8-YEAR high of 90% DESPITE more than three months of PEAK/reversal-threat price action.  We believe this combination leaves the USD vulnerable to not only lower prices, but potentially steep, relentless losses straight away.

Dollar Index Weekly Chart

Finally, on a massive quarterly scale below, the POTENTIAL for a textbook bearish divergence in momentum jumps off the page.  This divergence threat won;t be CONFIRMED to the point of non-bullish action on this scale until the market breaks May’16’s 91.92 low however.  But given the peak/reversal facts listed above and the Fibonacci fact that the rally from May’11’s 72.69 low spanned a length 651.8% longer (i.e. 1.618 progression) than 2008-09’s initial 70.70 – 89.62 rally contributes to a peak/reversal environment that we believe could be major in scope.  And most importantly, the market has now provided a number of prior corrective highs that serve as specific risk parameters on various scales from which a full and aggressive bearish policy can be objectively based and managed.

These issues considered, a full bearish policy and exposure remain advised with strength above at least 99.90 and preferably 101.34 required to threaten of negate this call.  In lieu of such strength further and possibly extensive, even relentless losses are expected straight away.

Dollar Index Quarterly Chart

 

EURUSD

The technical construct and expectations for the Euro are identical, only inverted to those detailed above for the USD Index with 11-May’s 1.0839 low and 10-Apr’s 1.0569 low considered the latest smaller- and larger-degree corrective lows and risk parameters from which a full and aggressive bullish policy can be objectively based and managed.  The trend is up on all scales with further and possibly accelerated gains anticipated straight away.

Euro Index 240 min Chart

Euro Index Daily Chart

Euro Index Weekly Chart

Euro Index Monthly Chart

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