Shorter-term traders with tighter risk profiles have been in a neutral-to-cautiously-bearish position since 08-Sep's break below 01-Sep's initial counter-trend low of 7.37 discussed in 08-Sep's Technical Blog in which we also highlighted the importance of 19-Aug's 7.08 low as a long-term risk parameter. With today's break below this 7.08 threshold detailed in the hourly chart below, the market has not only added to its developing impulsive decline from 30-Aug's 7.77 high, it has exposed a peak/reversal threat that may be major in scope.
As a direct result of today's continued weakness, we believe the market has defined yesterday's 7.29 high as the latest corrective high and tightest risk parameter it now is minimally required to recoup to even defer the developing downtrend, with further strength above Mon's 7.49 corrective high required to expose this month's sell-off attempt as a 3-wave and thus corrective affair within the secular bull trend. In lieu of such strength, further and possibly extreme losses are now expected.
Mid-Aug's breakout above prior 7.18-to-7.23-area resistance shown in the daily log scale chart above defined this area as new support one would expect to hold per any broader bullish count. The market's obvious failure to do so threatens the major bull trend and exposes a reversal that could be major in scope given the magnitude of the secular bull.
Cleaning out intra-day technical noise with a daily log close-only basis below and today's probable close below 18-Aug's 7.13 corrective low and area of former resistance-turned-support presents a similar picture of developing weakness and vulnerability.
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