December Live Cattle
In today’s price action we saw the market rise within reach of the previous 117.725 high that I have currently labeled as a wave 3 extreme. It is unclear to me where we are in the subset structure of the advance from the 112.900 low. I believe, as I have stated, that we are in the midst of a final 5th wave advance destine to extend above the 3rd wave. Now it must be stated that there always exist situations where the 5th wave fails to make a new high. These are called truncations. If today’s extreme represents the termination of the 5th then the market will undoubtedly come under pressure. A hold below 116.450 should see a follow through to roughly 115.300 at the cross zone support level. A pullback to hear could be viewed as a subset corrective wave and thus the market will turn higher off this level. The structure of any decline needs to be examined. If it unfolds in a 3 wave pattern then it would be corrective in nature. On the other hand if it displays impulsive qualities we might be looking at the start of something. All this is unclear as of now and more evidence is needed. I do not see any divergence in the momentum indicator which usually is evident at 5th wave highs. If we press up from here or come off a pullback we have near term resistance at +/-118.300. Overhead extension level comes in at approximately 121.
Please join me this Wednesday as I employ the Elliot Wave Theory to this an other commodity markets.