(C) Corn Slip Defines $6.44 S-T Risk Parameter, Gateway to Broader Bullish Count
Technicals, February 16, 2012; 11:05am
On the heels of last Fri's bearish divergence in momentum below 6.32 discussed in that day's Technical Webcast, the hourly chart below details yesterday's break below last Fri's initial 6.28 counter-trend low that confirms at least the intermediate-term trend as down. The important by-product of this weakness- especially given today's rebound- is the market's definition of 13-Feb's 6.44 high as the latest corrective high and short-term risk parameter this market is now required to recoup to render the past week's break from 6.52 a 3-wave and thus corrective structure consistent with a broader bullish count. In lieu of such 6.44+ strength, it would be premature to consider today's pop as a resumption of Jan-Feb's rally.
In last Fri's Webcast we discussed the generally lateral nature of the market's past four month price action. Indeed, the contracting-triangle pattern is arguably merely corrective/consolidative after Aug-Oct's sharp plunge that could be setting the stage for a resumption of late last year's bear. But as a result of Dec-Jan and Jan-Feb's rebounds, we believe the market has defined 18-Jan's 5.92 low as THE threshold this market needs to break to CONFIRM these recovery attempts as corrective ahead of the resumption of a major bear trend. In lieu of such sub-5.92 weakness, we remain biased to a broader base/reversal count ahead of what could be significant gains above 03-Jan's 6.64 high. And per this broader bullish count, the past week's smaller-degree but clear and present decline is considered a corrective buying opportunity. So the matter of technical and trading scale is an important one currently.
The weekly log chart below shows the market's current position trapped between the obvious and major 5.75 and 6.66 boundaries to the past four months' range. These levels represent the key triggers to this market's next major directional move. Whilst contained by these boundaries, traders must allow for a breakout either way. Sure, "biases" are ok, like ours to the bull side and where gains above levels like 6.44 and certainly 6.52 will increase the odds of a bullish breakout. But until such strength is proven, it would be premature to "conclude" such an outcome and ignore key downside risk parameters like 5.92, especially in light of recent short-to-intermediate-term weakness and when 77% of the hot Managed Money participants are betting on the bull side.
These issues considered, shorter-term traders with tighter risk profiles have been advised to move to a neutral/sideline position as a result of last Fri's mo failure below 6.32. Strength above 6.44 is now required to negate that move, render the slide from 6.52 a 3-wave and thus corrective structure, and resurrect the broader base/reversal threat from 15-Dec's 5.92 low. A bullish policy remains advised for long-term traders with a break below 5.92 required to negate this view and re-expose Sep-Dec's major bear slide.
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