December Live Cattle
In Friday’s writings the development of a daily Doji formation was covered addressing the potential bearish nature of the candle structure. We witnessed in today’s price action the market reacting in such a fashion. After opening unchanged for the session prices came under pressure as they established value below Friday’s candle body. The decline attempted to hold up at previously identified support between 114.200-113.800. The cross speed line intersection came in right at 114.200 and as the contract failed to rebound sellers successfully pressed the market lower to settle just off extreme of 113.350 at 113.425. The rally which has unfolded from the mid-September lows could be assessed as impulsive in nature. In the structural development of the advance certain extremes mark the commencement and termination of subset waves. Elliot Wave Theory has only a few hard rules. One of which states that the fourth wave cannot overlap the territory of the first. With the first wave high extreme coming in at 112.750 in is imperative that the bulls stave off any further declines of greater that .675. This level will most likely come under attack considering the close below the previously mentioned intersection at 114.200. In my opinion a violation of the first wave high breaks this bullish run’s back. The structure of the advance in this event would have to be relabeled an (a-b-c) non impulsive rebound. What this means is that the door would now be open for a decline which would ultimately violate the 106.72.5 low. I’d be on full lookout to sell into any corrective rallies that may develop. This whole scenario of course comes into play only in the event of a wave one high violation at 112.750. If on the other hand the longs are able to fight this off and close back above 114.600 then they will have in my opinion saved the day. The decline from the 117.725 level would then be assessed as a fourth wave low. Holding above 114.200 would thus point to an upcoming advance that projects to +/-120.