One of the main contentions we have with mainstream financial analysis is its tendency to show up late for a market’s trend. Then, once the conventional experts finally arrive, they search for details from the current market environment to explain price action that has long since been underway.
Take, for example, the April 2 news stories regarding the steep drop in Soybean prices to a four-month low.
According to the go-to-guys and girls of the popular press, one main event was behind soybean’s southern slide: A “bearishly construed” U.S. Department of Agriculture report revealing an 18% increase in soybean acreage from the previous year.
One problem: The “psychology” of the market had changed long before the U.S.D.A. spilled the acreage beans. To be exact, the most recent downtrend in soybeans kicked off on March 2.
About that time, the March 5 Daily Futures Junctures picked Soybeans out of the commodity crowd due to its fully ripened price chart. In that publication, editor Jeffrey Kennedy revealed that, while his operative Elliott wave labeling called for a sustained move higher, downside potential also existed. In his words: “Conversely, a decline as low as 1417 ½-1392 would argue that [a fourth wave was in progress and] a larger degree third wave peak is in place at the March 2 high.”
The reason for his alternate wave labeling was simple: 1392 – the very bottom of his cited resistance range – represented the extreme of wave one. One of the three cardinal Rules of Elliott wave analysis cites that wave four may never end in the price territory of wave one.
To do so would signify the onset of a more complex and drawn out triangle pattern.
As it turns out, soybean prices did fall below that magic 1392 level – on March 10. On that day, Jeffrey Kennedy revisited the grain in the March 10 Daily Futures Junctures. Here is an excerpt from his analysis: “The fallout from today’s price move is that instead of looking higher as previously discussed, wave patterns now indicated that wave (3) ended at 1586 ½. We can now confidently turn our attention to wave (4) down into Fibonacci and structural support.”
Now the time has come again for Jeffrey to turn his attention to soybeans. In the April 3 Daily Futures Junctures, Jeffrey reveals the most common Fibonacci price targets for fourth waves, and how close this grain is to reaching that point as of right now.
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