Related Topics

In Focus: Hogs and Soybeans

Two likely targets in the budding U.S.-China trade war

by Dana Weeks
Updated: May 23, 2018

Seasonal patterns, politics, economics -- do they affect Elliott wave patterns in commodity markets? ElliottWaveTV asked this -- and other -- questions of Jeffrey Kennedy, long-time editor of our ever-popular Commodity Junctures.

Dana: Hi, I'm Dana Weeks, and joining me today is Jeff Kennedy, Elliott Wave International's Chief Commodity Analyst and editor of Commodity Junctures and Trader's Classroom. Hi Jeff.

Jeff: Hello Dana.

Dana: So Jeff, I have to begin by checking in with you about all of these headlines, about the trade disputes with China, tariffs being in place, and even talk about a trade war, possibly, and I'm wondering how will this affect commodities, and especially commodities that are heavily exported to China, like hogs and soy beans.

Jeff: Yes, we do live in exciting times right now. Certainly with talk about a trade war. Certainly with China. Short term, I do think that there will be somewhat of an impact in many of the commodities I follow. But, bigger picture, longer term, I really don't believe there's gonna be much of an impact at all. As I've mentioned before, I really believe that technical analysis is a language, and the more you understand the language of technical analysis, the more you understand the narrative of the overall market. So my primary focus is that of the price chart. Now again, having said that, if there's a big news event that happens say overnight, of course there's going to be maybe a reaction in the market the following day, or possibly the following week, but as far as the longer term trends, those are pretty much set.

Dana: And Jeff, do you think that that would disturb the patterns in Elliott Wave?

Jeff: Whenever you have corrective wave patterns, we have three primary types of corrective wave patterns that we examine or look at as Elliottticians: the zigzag, the flat, and the triangle. Sometimes, when things get more complex, you'll actually see the combination of two or more of these corrective wave patterns, and they're joined together, excuse me, joined together by an intervening wave or corrective wave that we refer to as wave x. So, the overall combination would be, say, a double zigzag or a double three, we would label that as a wxy, but I've seen those x waves a lot, and those x waves tend to be very sharp, and sometimes they're just simply stop running moves, or the result of a news event, as which you just mentioned.

Dana: So Jeff, how do you know whether to fade the move after the news, or to stick with it?

Jeff: Well, the answer to that question I think really has to deal with the risk on a potential trade. If you're a longer term investor, you would tend to say have your protective stops in the market either well above or well below current price sanction, so when entry day spike, or a spike in price that lasts maybe two or three trading days, may not be that big of a deal. But if you're a small trader or say you're a day trader, then that risk, that actually might be too much risk for you to endure. So that question really is best answered by the type of trader you are, and the type of possession you actually have in the market.

Dana: So Jeff, let's move to the markets, starting off with beans. Are they ever going to break out of their range? It seems to have been in play since 2017, and arguably much of 2016 as well.

Editor's note: In the full version of this interview, Jeffrey gives you his latest forecasts for soybeans and wheat. The full version is reserved for EWI subscribers. Risk-free, try Commodity Junctures now.

Already an EWI Subscriber or Club EWI member?

Log in now to continue ...

Don't have an EWI Login?

No worries! Join Club EWI, our free Elliott wave educational community, and gain free access to this resource plus a full catalog of other valuable lessons. Plus, we'll keep you updated with new resources, exclusive invitations, and deals.

We respect your privacy.