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Futures: Five Steps Forward…
Markets rarely move in straight line. Here's an Elliott wave take on how they do it.

By Vadim Pokhlebkin
Mon, 24 Mar 2008 16:45:00 ET
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Take a look at this diagram – an idealized chart of the Elliott wave pattern:

That's Elliott wave. (What you see is a bull market pattern. In a bear market, flip this chart upside down).

As complex as Elliott wave analysis may be perceived or made by some of its practitioners, at its core, it's all about "fives and threes:" Five waves in the direction of the trend and thee waves against it. Five steps forward, three steps back, so to speak.
 
Once you've trained your eye to see this basic pattern in the charts of your favorite market, you're halfway there.
 
Maybe even more than halfway, actually. Because even experienced Elliotticians first and foremost look for this basic Elliott wave picture. Only then do they proceed to more detailed chart analyses – such as the waves' internal structure, Fibonacci ratios between them, etc. 
 
For example, in tonight's issue (March 24) of his Daily Futures Junctures, editor and Elliott Wave International's Senior Commodities Analyst Jeffrey Kennedy applies this very same, "basic" approach to charts of Live Cattle and Feeder Cattle.
 
"Prices travel the farthest in the shortest amount of time in waves one, three and five – especially in wave three. Conversely, it takes a long time for prices to travel a short distance in corrective waves two and four," reminds his subscribers Jeffrey.

Then, he proceeds to give you a detailed view of the recent rally in Live Cattle (one from the March low of 89.10) and the internal structure of the similar rally in Feeders. 

Jeffrey's conclusion? Both moves look like corrections.

What does this mean for Cattle futures in the next few days? Get Jeffrey's complete analysis and price targets online right now, risk-free – just scroll below to learn how.

Tags: feeders, feeder cattle, live cattle, cattle futures, Commodities, fibonacci

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The Elliott Wave Principle is a detailed description of how financial markets behave. The description reveals that mass psychology swings from pessimism to optimism and back in a natural sequence, creating specific Elliott wave patterns in price movements. Each pattern has implications regarding the position of the market within its overall progression, past, present and future. The purpose of Elliott Wave International’s market-oriented publications is to outline the progress of markets in terms of the Wave Principle and to educate interested parties in the successful application of the Wave Principle. While a course of conduct regarding investments can be formulated from such application of the Wave Principle, at no time will Elliott Wave International make specific recommendations for any specific person, and at no time may a reader, caller or viewer be justified in inferring that any such advice is intended. Investing carries risk of losses, and trading futures or options is especially risky because these instruments are highly leveraged, and traders can lose more than their initial margin funds. Information provided by Elliott Wave International is expressed in good faith, but it is not guaranteed. The market service that never makes mistakes does not exist. Long-term success trading or investing in the markets demands recognition of the fact that error and uncertainty are part of any effort to assess future probabilities. Please ask your broker or your advisor to explain all risks to you before making any trading and investing decisions.

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