Fri’s break above 03-Feb’s 7.77 high reaffirms our base/correction/reversal count introduced in 31-Jan’s Technical Blog and leaves last week’s 7.45 low in its wake as the latest smaller-degree corrective low the market is now minimally required to fail below to mitigate this call, render the recovery from 23-Jan’s 7.12 low a 3-wave and thus corrective affair and re-expose the major bear.  Per such, this 7.45 level serves as our new short-term risk parameter from which shorter-term traders can objectively rebase and manage the risk of non-bearish decisions like short-covers and new bullish punts.

On a broader scale, 30-Dec’s 7.99 larger-degree corrective high remains intact as our key long-term bear risk parameter the market is still obligated to recoup to, in fact, break the downtrend from 10-Oct’s 9.62 high.  But as introduced in 31-Jan’s Technical Blog, and especially after Fri’s continued recovery, the combination of:

  • the nicely developing potential for a bullish divergence in WEEKLY momentum amidst
  • historically bearish sentiment/contrary opinion levels and
  • a prospective complete 5-wave Elliott sequence down from 10-Oct’s 9.62 high

presents a base/correction/reversal threat that could produce protracted gains in the weeks and perhaps even months ahead.  Further strength above 7.99 will confirm this threat to a scale sufficient for even longer-term commercial players to neutralize any remaining bearish exposure and consider moving to a cautious bullish stance.

Finally, on an even broader monthly log active-continuation basis, the chart below shows the market’s position deep within the middle-half bowels of its massive but lateral historical range where the odds of aimless whipsaw risk are approached as greater, warranting a more conservative approach to directional risk assumption.  Herein lies the importance of the tighter directional risk parameters and flexion points we’ve identified at 7.45 and 7.99.

These issues considered, a bullish policy and exposure remain advised for shorter-term traders with a failure below 7.45 required to negate this call and re-expose the major bear, warranting a return to a cautious bearish stance.  Longer-term commercial players are advised to neutralize remaining bearish exposure on a recovery above 7.99 and also move to a cautious bullish stance above 7.99 ahead of a correction or reversal higher of indeterminable and potentially protracted scope.

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