In a virtual repeat of our previous update from Wed’s Technical Blog, today’s break above Wed’s 113.93 high reaffirms this spectacular bull market and leaves yesterday’s 108.63 low in its wake as the latest smaller-degree corrective low the market is now required to sustain gains above to maintain a more immediate bullish count. Its failure to do so will confirm a bearish divergence in short-term momentum that, following such exaggerated price gains, would expose even a correction that could be nominally extensive. While such a smaller-degree mo failure would be of a grossly insufficient SCALE to conclude anything more than another interim corrective dip, both short- and long-term traders are advised to move to a neutral/sideline position on a sub-108.63 failure. Until such weakness is shown, the trend remains up on all scales and should not surprise by its continuance.
The weekly (above) and monthly (below) log scale charts show the magnificence of this bull trend that’s been the biggest performer across the entire commodity spectrum the past few weeks. The monthly chart shows NO levels of any technical merit above the market shy of 2011’s 219.70 all-time high. This does not mean we’re forecasting a move to 219. But it certainly does mean that until or unless this market stems the clear and present and major uptrend with at least a bearish divergence in short-term momentum, the market’s upside potential remains indeterminable and potentially extreme.
Understandably, market sentiment/contrary opinion levels are at astronomical heights typical of major peak/reversal environments. This said, traders are reminded that sentiment is not an applicable technical tool in the absence of an accompanying confirmed bearish divergence in momentum. Since 20-Sep’s 88.95 larger-degree corrective low is too far away and too impractical at this point to use as a longer-term risk parameter pertinent to longer-term commercial traders, there’s little objective recourse but to tighten bull risk as much as is objectively possible and acknowledge and accept whipsaw risk (back above whatever high is left in the wake of a short-term mo failure) in exchange for much deeper nominal risk below 88.95. Herein lies the importance and function of yesterday’s admittedly tight but objective short-term risk parameter at 108.63.
These issues considered, a bullish policy and exposure remain advised with a failure below 108.63 required to move to a neutral/sideline position to circumvent the depths unknown of a correction or reversal lower that could be major in scope. In lieu of such weakness, further and gains remain expected.
