Elliott Wave Technical Analysis: Wheat - Friday, Feb. 16

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Wheat Elliott Wave Technical Analysis 16 February 2024

Function - Counter-trend

Mode - Corrective

Structure - Triangle

Position - Black Wave X of red wave (5)

Direction - Black Wave Y of red wave (5)

The price action of wheat is quite interesting. It's fascinating to see how the Elliott wave theory can be clearly applied to price charts, and wheat is a perfect example of that. After being stuck in a sideways trend for over a month, the commodity broke out to the downside. This has increased confidence that the bears will continue to dominate in the coming days or the next few weeks.

On the daily timeframe, we can easily spot a bearish impulse wave pattern that began in March 2022 at a price of 1364. This bearish impulse is now in its final stage, with its 5th wave (shown in blue) forming an ending diagonal structure. This was our long-term forecast, and we informed our subscribers to closely monitor the price action of this commodity. Meanwhile, the 5th wave (wave 5 in red) of the diagonal is still in progress. By zooming in on the hourly timeframe, we can observe a bearish setup that aligns with this forecast.

Traders who prefer the daily timeframe will need to wait for the completion of the diagonal before looking for bullish opportunities. According to Elliott wave theory, a 3-wave bullish correction is anticipated to follow. Now, let's shift our focus to the H4 timeframe.

Looking at the 4-hour timeframe, we examined the sub-waves of the red wave 5. It appears to divide into what could potentially be a double zigzag pattern: wave W-X-Y (shown in black). After wave W concluded, the price entered a sideways range for 4 weeks as part of wave X. In our recent updates, we identified 583 as the breakout point for wave Y, where this commodity is likely to attract more sellers.

As the chart illustrates, the subsequent sell-off was rapid. In the latest update, we presented this chart to show the ongoing developments. Moving forward, wave Y is expected to further sub-divide into another zigzag structure. Meanwhile, as the price approaches a crucial support level, we might witness the end of the blue sub-wave ‘a’, followed by a corrective rally for blue sub-wave ‘b’, and then a further sell-off.

Although there are several potential paths this market could take, this currently appears to be the clearest scenario from our perspective.

Technical Analyst : Sanmi Adeagbo

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Analyst Peter Mathers TradingLounge™ Australian Financial Services Licence - AFSL 317817

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