While 22-Apr’s bullish divergence in momentum above 15-Apr’s 13.17 high confirmed the entire Jan-Apr sell-off attempt in the May contract as a 3-wave and thus corrective affair, that day’s explosion in the soon-to-become-prompt Jul contract above its 29-Jan high at 13.705 reinstated its major bull trend. A subsequent 2nd-Wave correction and explosive 3rd-Wave continuation of the rally on May 4th and 5th reaffirm an obviously trendy, impulsive move up from 21-Apr’s 13.09 low with Fri’s rebound leaving that day’s 14.08 low in its wake as the prospective end or lower boundary of a (4th-Wave) correction ahead of an eventual resumption of this bull to at least one more (5th-Wave) round of new highs above last week’s 14.62 high. Per such, we’re identifying Fri’s 14.08 low as our new key risk parameter from which a bullish policy and exposure can be objectively rebased and managed.
Then weekly log scale chart of the Jul contract above shows the magnitude of this developing bull trend. Remaining upside potential should not be underestimated relative to historical prices shown in the monthly log active-continuation chart below. We hesitate to place much, if any importance on 2Q20’s COVID-related spasm to 1 22-handle high, but gains to the 16-to-18-handle-area that capped the market between 2011 and 2014 does not seem unreasonable. And encroaching challenge however comes from the market’s return to the middle-half bowels of its historical lateral range where the odds of aimless whipsaw risk are advised to be approached as higher. Such a threat warrants a more conservative approach to risk assumption that places an emphasis on tighter but objective risk parameters like 14.08.
These issues considered, a cautious bullish policy and exposure are advised with a failure below 14.08 deferring or threatening this call enough to warrant defensive measures. In lieu of such sub-14.08 weakness, we anticipate a continuation of the bull to at least one more round of new highs above 05-May’s 14.62 high.
