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Wheat: Wave (b) of ((IV)) is in play

Zw1 2022 05 07 05 14 26
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Elliot Wave Analysis for WHEAT

Wheat is grown on more land area than any other food crop. The archaeological record suggests that wheat was first cultivated in the regions of the Fertile Crescent around 9600 BCE. World trade in wheat is greater than for all other crops combined. Bread wheat occupies 95% of the wheat produced worldwide. In 2020, the world production of wheat was 761 million tonnes. So, from the aspect of the trading chart, the importance to study this excellent cereal is high.

Monthly Range: Completing wave (b) of ((IV))

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On the monthly trading chart (log scale), we see an uptrend from one side, and sideway corrections from the other side. When such a thing is happening, then we are positively sure that, we are dealing with third and fourth waves. Due to the higher highs between the motive waves, and the overlapping between the corrective waves, we don’t feel that this would be a leading/ending diagonal, because the wedges are sharper and make no sideway move.

            Specifically, looking at the left of the chart, in the late ’70s, after an upward trend, we had a nice sideways movement, till the starting of the ‘’Great Recession’’ (2007-2009), and then went to new all-time highs. This first sideway, was a nice contracting triangle, with its fifth wave to be a triangle again. In February of 2006, the breaking above the upper trendline of the smaller triangle (381), gave a breath to the buyers, who traveled the market to a new high, at 1349,4, constructing the (V) of the ((III)) Grand Super Cycle wave.

After that, the market came back to the level of the previous breaking point (386), with a 3-wave mode, like a zig-zag (a) Super Cycle of ((IV)) Grand Super Cycle, and from August of 2016, the market made a new all-time high at 1363,4. Until now, we observe 2 things.

The first is that, unlike the fact of making a new high, the candle has a long upper wick, which shows us exhaustion. The second is that since the previous lesser degree fourth wave – Super Cycle degree -, had a long duration, it is expected this ((IV)) to have also a big duration, and not finish at the (a) Super Cycle wave, making an A-B-C zig-zag. Having gone beyond the 1349 point already, the only option for a sideways correction, starting with an (a) of three waves, is a construction of a flat. That’s why we are labeled this rally as a (b) of ((IV)). 

Daily Range: Completing wave (b) of ((IV))

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On the daily trading chart (log scale), we can see that maybe the rally still hasn’t finished, or is about to finish, because it didn’t make any lower high or lower low yet. Logically, we are expecting to have a 5-wave mode retracement, as a (c) of ((IV)), going again at the level of 381, testing the support of the (IV) Super Cycle wave.

But, since our basic scenario is that generally the wave (b) hasn’t been completed yet, then we would expect to see a clearer 3-wave sequence for this whole (b) of ((IV)) Grand Super Cycle, like the (a), did. So, it wouldn’t mind us at all to have a retracement of almost 50% of this total rally and then move to higher highs for the last c Cycle of the (b) Super Cycle of the ((IV)) Grand Super Cycle wave. Of course, just to remind you that even in an expanded flat, the second wave may go up to 138,2% of the previous same degree wave, as the guidelines are saying.     

See More Analysis For Commodity Market: https://tradezign.com/category/commodities

Written by Trade Zign

TradeZign (TZ) is a market forecasting firm,TZ's 10 full-time analysts cover every major market (commodities, stocks, energy, bonds, metals, currencies).

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