The market’s failure today below 14-Jul’s 5.26 corrective low and our short-term risk parameter discussed in last Wed’s Technical Blog confirms a bearish divergence in momentum that defines last week’s 5.52 high as the end of a textbook 5-wave Elliott sequence up from 26-Jun’s 4.71 low and start of at least a correction of this rally and possibly a more protracted reversal.  As a direct result of this combination of factors, last week’s 5.52 high becomes our new short-term risk parameter from which non-bullish decisions like long-covers and bearish punts can be objectively based and managed.

In addition to the momentum failure and complete wave sequence, the weekly log chart below shows the market’s rejection once again of the upper-quarter of its massive, multi-year lateral range that has been and remains a condition from which bulls need to tread very cautiously and suspiciously.

These issues considered and after being advised to neutralize bullish exposure on a failure below 5.26, traders are further advised to first approach recovery attempts to the 5.35-area OB as corrective selling opportunities ahead of a larger-degree correction or reversal lower with a recovery above 5.52 required to negate this call and warrant its cover.  In lieu of such 5.52+ strength, we anticipate lateral-to-lower prices in the period ahead that could include another reversion to the middle of this market’s incessant range around the 4.80-area or lower.