Going over the last three months very quickly, the low made in May of this year held the long term swing point at 137.20, this was 38.2% of the 10/1/22 low and 4/22/22 high. It did have one close below it, however the next day was right back above it (we always want to see closes above/below to violate a level). The long term target after holding this level is new highs for the year.
The first rally took it up to 61.8% of the down move on 6/9/22 and this is where the ONE44 61.8% rule kicked in (61.8% to 61.8%). The setback back went right to 61.8% the other way on 6/13/22 and then right back up to 61.8% on 6/21/22. The break from there sent it to 61.8% again on 6/30/22 and then to 61.8% of the smaller move on 7/12/22 and again on 7/15/22. You can see the 61.8% effect in our latest update where the Soybeans have been trading between the 61.8% levels for a month.
In this past week the October Cattle hit 38.2% of the rally on 8/31/22 keeping the trend very positive and giving us an upside target of the 148.05 major Gann square. Failing to hold 142.35 should send it down to the 138.28 major Gann square and 78.6% at 138.20.
The low in May and then again in July both held 23.6% back to the 2020 low, keeping this market very strong and it went to new highs for the year. As you can see on the chart the three setbacks before making that new high all held 38.2%, also keeping the short term trend positive.
After the new high the break to 38.2% on 8/16/22 could only rally 38.2% back to the high and this where the trend changed (short term). The break from it took it to 61.8% on 8/19/22 and the rally spiked above 38.2% of the break, but didn't close above it, keeping the short term trend negative. The next break went to 78.6% on 8/25/22 and once again the rally was stopped by 38.2% on 8/30/22. The break from it made a new low for the move on Friday.
When it made the new high for the year on 8/11/22 the retracements moved up and the 23.6% level is now 88.75. It can trade below this level (it also has a major Gann square at 88.27), but it would need to close back above it to keep the long term trend very positive. The key on any rally from the current low, or a new one will be to watch 38.2% (currently 94.25) to see if the short term trend will turn positive again. A failure to hold 88.75 will give us a downside target of 81.00.
If you like this kind of analysis and trade the Grains, give us a look Grains Weekly update.
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