Home > Commodities
Soybean Meal: You Don't Want To Miss Next Wave
How do you know WHERE a wave 2 correction may end and give way to wave 3, the most powerful wave?
In a recent story about Soybeans and Corn, we talked about one of the Three Rules of Elliott, which states that, "Wave 2 can never retrace more than 100% of wave 1":
By applying this rule in your trading, you always know the exact price point where your "wave two" is no longer a wave two. Which means that you always know the exact price point where to place your stop-loss – a cornerstone of proper risk management.
But let's take this one step further. Assuming that your market is indeed in a wave 2, how do you know where it might end? That's a crucial piece of information, because if you can determine the end of wave 2, you can set yourself up for a wave 3 move. And no one wants to miss third waves: They are the strongest and typically longest waves in an Elliott wave impulse, and "riding" them is pure pleasure. Bob Prechter calls third waves "a wonder to behold" in his Elliott Wave Principle – Key to Market Behavior.
So, how do you know where a wave 2 might end? Simple: use typical Fibonacci-calculated ratios between waves. As the editor of Elliott Wave International's Daily Futures Junctures Jeffrey Kennedy reminds his subscribers in tonight's (April 9) issue, "Typically, the depth of wave two is a .618 multiple of wave one."
Jeffrey placed that reminder in the April 9 DFJ for a reason. Soybean Meal futures, the market he focuses on it tonight's issue, has likely just ended a wave 2. Yes, a wave 3 move should be next… but there is more.
Soybean Meal's recent wave 2 correction retraced only about .382 of wave 1. Why didn't it go all the way to that typical .618 retracement? Because, says Jeffrey, just like with fourth-wave corrections, shallow second wave retracements "tend to occur when the larger trend is extremely strong."
Which means that the coming wave 3 in Soybean Meal is likely to be a true "wonder to behold." Find out what direction it will go and to what price targets it may reach online now, in the April 9 Daily Futures Junctures. (Please scroll below for details on a risk-free subscription.)