View in the $ index remains unchanged as the market is seen within an extended period of downward ranging, and as the bigger picture downside momentum since June continues to slow. Though potentially seen as part of a longer term bottoming (see longer term below), the final bottom is likely not yet in place, and suggests more of this chopping and at least marginal new lows ahead (possibly forming a falling wedge, see “ideal” scenario in red on daily chart below). Short from the Aug 4th resell at 78.30 and for now, would stop on a close above the bearish trendline from early July (currently at 79.35). Note that a break above there would not abort the view of more downward ranging, and would be looking to resell at higher levels if taken out. Also, further declines below the Aug 5th low at 77.45 may be limited, so will want to trail stops more aggressively on further near term weakness, and especially an approach (and break) of that low. Nearby support is seen at 78.15/25.
From a longer term perspective, there is no change in the bearish bias that has been in place since the March “false break” of the Nov high at 88.45. However, the bigger picture downside appears to be getting late in the downside move, within wave V in the fall from the March high at 89.60 (see numbering on weekly chart/2nd chart), while the downside momentum over the last few months is also starting to slow. Though this suggests that a potentially important bottom (for at least 2-3 months and minimum 5 pts) may be nearing, the shorter term downside pattern is still not “complete”(see above), suggesting at least some further downside first. So for now, would maintain the longer term bearish bias, but will watching closely for further indications of a longer term bottom to switch.
