Today (September 28) I sat down with EWI's Futures Junctures Service editor Jeffrey Kennedy to discuss what markets are lighting up his radar of near-term opportunity.
Nico Isaac: So, Jeffrey, is there one market in particular whose wave pattern is reaching an important point of developement?
Jeffrey Kennedy: No, there isn't one market. There are the main five markets that make up the Grain complex: corn, wheat, soybeans, soybean meal, and soybean oil.
Nico: Really? I was just thinking how challenging it is to find a clear outlook for grain markets from the usual fundamental news sites. Just this morning, I came across these completely contradictory headlines within two hours of each other:
"Corn Prices May Rise On Demand." VERSUS "Grains Fall As European Debt Crisis Slows Demand."
How does Elliott wave analysis succeed where fundamental analysis fails to provide consistent insight into market's near-term trend?
Jeffrey: One word: Clarity. There's clarity and truth in a price chart you can't typically find in usual forms of analysis.
Nico: I just looked over the five 240-minute price charts you present -- of corn, wheat, soybeans, soybean oil, and soybean meal -- in the September 27
Daily Futures Junctures. It's amazing because they are practically mirror images of each other. The short-term wave pattern is nearly the same in all five markets: a fourth wave. Here, I've reprinted the chart of corn, minus the larger wave count, to illustrate the wave 4 in progress.
Nico: Are there any "dead-giveaway" personality traits of fourth waves that distinguish them from the other waves 1, 2, 3, and 5?
Jeffrey Kennedy: There is an obvious distinction: Fourth waves are corrective in nature, meaning they unfold in three waves and move "counter" to the larger trend. Waves 1, 3, and 5 are impulsive. They unfold in five waves and move with the larger trend.
Nico: Are there any guidelines that govern the depth of fourth waves?
Jeffrey: The two guidelines I focus on primarily with respect to fourth waves are these:
- The most common Fibonacci retracement of fourth waves is a .382 retracement of wave three.
- Corrections, especially when they themselves are fourth waves, tend to register their maximum retracement within the span of travel of the previous fourth wave of one lesser degree, most commonly near the level of its terminus
There is also one very important RULE of fourth waves. It states that in an impulse, wave four cannot enter the price territory of wave one.
Nico: So, if the prices of these grain markets rally into wave one, you then know that the fourth wave interpretation is invalid. You've also included key and critical resistance levels on each your charts for the five grain markets. What criteria do you use to calculate these levels?
Jeffrey: A number of proprietary techniques.
Nico: Jeffrey, thank you so much for your time. This has been a very enlightening interview.
And, in the September 27
Daily Futures Junctures, you can see Jeffrey's complete analysis of the
five grain markets, including all
17 price charts AND a
live video update.
Jeffrey Kennedy is a premier authority on combining technical methods of analyzing commodity markets with Elliott wave studies. Five times a week, Jeffrey uses his
Daily Futures Junctures platform to highlight those markets with the most viable near-term opportunities. And, in his long-term sister publication
Monthly Futures Junctures, Jeffrey tackles the bigger picture that encompasses the months, and even years ahead.