Posted on 8/15/2017 9:07 AM by Dave Toth
In yesterday’s Technical Webcast we introduced the prospect of a developing base/correction condition following 04-Aug’s bullish divergence in very short-term momentum that required the next larger-degree “scale” of strength to perpetuate the condition. This morning’s break above 09-Aug’s 93.89 initial counter-trend high is such strength and leaves Fri’s 92.93 low in its wake as the latest smaller-degree corrective low and new short-term risk parameter from which non-bearish decisions like short-covers and cautious bullish punts can now be objectively based and managed.
While this morning’s strength identifies an exact risk level (92.93) for non-bearish decisions, there is NO WAY to know whether this recovery is the correction we suspect it is OR the start of a major reversal higher. In other words the market’s upside potential is indeterminable. And given the extent of this year’s USD collapse, even a relatively minor rebound could be nominally significant.
The ONLY way to get a handle on the market’s upside potential is AFTER a countering bearish divergence in momentum stems it. And this requires proof of weakness below az prior corrective low like, currently, 92.93.