WHEAT:
Another example of a market with a
perfect pattern and ratio delineation, whose cycle framework is a
bit 'out of sync.' You can see the three major waves up, and we are now working
on the three major waves down, wave 1 has been completed as has wave 2, and we
are now in third and final wave 3. Ratio objectives for wave 3 (from 1.618
of wave 1) are at $3.15. But the next time cycle does not hit until
early March, 55 weeks out from 'K', which was the turnaround pivot point of a
longer term cycle. If we hit $3.15 before early March, and the subwaves of wave
3 downward are all in place, then shorts can be covered and longs initiated,
although conservative traders would be wise to await the completion of the
55-week cycle to achieve a greater degree of certainty.
SOYBEANS:
The recent downtrend in soybeans has
been a thing of beauty. The pattern has been easy to follow. We are
currently in wave 3 of wave II (i.e., we are about to complete the final minor
wave downwards of the second major leg downwards), at which point we should see
a nice sharp rally upwards to the 61.8% retracement level, and then final Wave
III to the downside going into the next major 55-week cycle during March.
The Downtrend in beans has been
particularly rewarding to trade, since there were three separate and distinct
61.8 retracements (as outlined) which gave everyone an opportunity to sell
short on good rallies, if they missed selling the top.
The downside objectives are as
follows: 'A' represents the 61.8% correction of the move up from July of 1983,
and 'B ' represents the 61.8% correction of the entire move from the lows of
October of 1982. Therefore on a near term basis, we should see a rally upwards
in the beans once the $7.20 level is hit, but we must wait to see the
completion of the 55-week cycle before we can be confident that we are embarked
upon a new move to the upside that will take out the $9.50 level.
Summary:
To sum it all up, my Fibonacci
approach is based upon an accurate analysis of the Pattern, Time, and Ratio
of each market involved. In my eleven years of trading, both for myself and
my customers, I have found no more accurate or helpful system than this
application of the Fibonacci series to the futures markets.
Tucker Emmett is a cum laude
graduate from Harvard University where he studied mathematics and economics. In
1970 he was awarded the Juris Doctor degree from the University of Virginia Law
School. He is a registered representative in securities and commodities and is
a member of the Chicago Mercantile Exchange. He writes a bi-weekly review
published by Anspacher on grains, meats, metals, and currencies.
Stochastic & RSI
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