RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Posted on Dec 20, 2022, 08:10 by Dave Toth

Overnight’s explosive break above 02-Dec’s 74.97 high and resistance reaffirms our major base/reversal count introduced in 11-Nov’s Technical Blog and identifies new short- and long-term bull risk parameters at 74.50 and 72.39, respectively.  The 240-min chart above and daily chart below show 15-Dec’s 72.39 low as the latest larger-degree corrective low this market is now required to fail below to confirm a bearish divergence in momentum and break Oct-Dec’s uptrend.  The prospect that this impressive, impulsive rally might be in its completing 5th-Wave is labeled below.  HOWEVER, this count will only gain traction IF/when this market arrests the clear and present uptrend with a bearish divergence in momentum.  To confirm such a mo failure currently requires a failure below 72.39.

On a shorter-term basis detailed above, we’re defining yesterday’s 74.50 high as the minor 1st-Wave of the resumed portion of the bull from last week’s 72.39 low.  To maintain the 5-wave impulsive integrity of the rally just from this 72.39 low, the market needs to sustain gains above at least 74.50.  Its failure to do so will be the first indication that the rally from 21-Oct’s 66.23 low may have ended and that a larger-degree (2nd-Wave) correction back down may then unfold WITHIN a massive base/reversal process.  Per such, we’re identifying 74.50 as our short-term bull risk parameter pertinent to shorter-term traders with tighter risk profiles.  But given the 3rd-wave-manner in which the market has exploded today, we strongly suspect an interim 4th-Wave corrective setback somewhere along the line ahead of a (5th-Wave) continued rally that will present an even tighter yet objective bull risk parameter for shorter-term traders.

From a long-term perspective, the extent and impulsiveness of the past couple months’ rally is consistent with a base/reversal environment that could be massive in scope, lasting quarters or even years.  The weekly log chart below shows the yen quickly retracing near 38.2% of 2021-22’s entire 22-MONTH decline from 97.55 to 66.23 in only two months.  This move reinforces our major base/reversal count that contends 21-Oct’s 66.23 low completed a major 5-wave Elliott sequence as labeled, exposing a major base/reversal process.

These issues considered, a bullish policy and exposure remain advised with a failure below 74.50 required for shorter-term traders to neutralize exposure and commensurately larger-degree weakness below 72.39 for longer-term institutional players to follow suit.  In lieu of such weakness, the trend remains up on all scales and should not surprise by its continuance or acceleration straight away.

Bart Smith