RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

This week’s continued rally above last week’s 111.78 high reaffirms our developing bullish count introduced in 25-Apr’s Technical Webcast and leaves the Mon morning 111.43 low in its wake as a smaller-degree corrective low we believe this market must fail below to threaten a potentially broader bullish count.  In this regard we are considering 111.43 as our new short-term risk parameter from which a cautious bullish policy can be effectively based and managed.

Arguably, we could have chosen Tue’s 111.96 low as a corrective low the market now needs to sustain gains above to maintain the impulsive integrity of a more immediate bullish count.  And this tighter level does serve as a micro risk parameter that comes in exchange for greater whipsaw risk.  But we’re opting for the 111.43 level as a preferred shorter-term risk parameter because it’s below a relatively key area of former resistance-turned-support from that 111.78-area of highs from last week.

Yen 240 min Chart

Yen Daily Chart

On the one hand we want to err on the side of a more conservative approach to risk assumption because of market’s position still deep, deep within the middle-half bowels of the past COUPLE YEARS’ range between 125.86 and 99.54 shown in the weekly chart below.  Such range-center conditions are often rife with erratic, volatile price action and aimless whipsaw risk.

Conversely however, the extent of the past couple weeks’ rebound exposes the sell-off attempt from 15Dec16’s 118.67 high a clear 3-wave affair as labeled in the daily chart above.  Left unaltered by a relapse below 17-Apr’s increasingly key 108.13 low and new long-term risk parameter, this 3-wave decline is considered a corrective event that warns of a resumption of Aug-Dec’16’s major uptrend that preceded it.  And last month’s 69% reading in the Bullish Consensus (marketvane.net) measure of market sentiment accorded the yen futures contract- its highest level since Oct 2011 – would seem to be consistent with a count calling for a more significant move higher in the USD (lower in the JPY).

In sum, a cautious bullish policy remains advised with weakness below 111.43 required to diffuse this call and warrant a move to the sidelines (below 111.96 for scalpers).  In lieu of such weakness further and possibly steep gains should not surprise with 10-Mar’s 115.50-area highs and resistance the next pertinent upside threshold.  A break above 115.50 would likely then expose a run at the (119-handle) upper-quarter of the 2-year range.

Yen Weekly Chart

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