Weekend Update - Grains

CORN
The corn market had strong upside price action this past week.

This week I'm showing the December contract instead of the usual continuous contract.

I'm not quite sure what's going on in this market. As strange as this sounds, I believe the 302 L (both contracts) either completed an important bottom, or we are in the early stages of much lower price.

I can make arguments both for and against each scenario. It does appear that we finished a 5 wave structure down off the 474.60 H (465.50 continuous).

Even though I show the bullish case on the chart, I favor the alternate. It's hard to imagine c being that small compared to a - not even getting to the 61.8% of a.

Then again, the technicals are telling me that price appears to want higher. Notice the monster positive RSI divergence that has developed over the last few months.

Also noteworthy, is the massive upside volume registered in this market since mid September.

I have discussed a [4] wave potential triangle in previous updates. The proportion with [1] is just to extreme in my opinion. It should be noted, however, that price has not exceeded the wave [4] H, as of yet.

They were nice enough to leave us hanging, as Friday's trade fell a few ticks shy on December, while the continuous had a perfect double top at 373.

Critical levels for the upcoming week are the wave [4] price extreme at the 376 H (373 continuous) and the 302 L.

Bottom Line - I'm unsure at this point what precisely structure is telling us. I can tell you that I need to see an impulse that takes out the channel before I can get behind a cycle degree bottom.

All prices basis December contract unless noted.

SOYBEANS
The bean market enjoyed nice upside price action this past week.

My interpretation of structure has beans completing primary [B] of a double zigzag of cycle wave c. My alternate view is that primary [C] finished at the 1040 H and we have started cycle c down.

This structure reminds me of where the crude market was a few weeks ago. A [B] wave triangle is certainly possible and is a 2nd alternate.

If [B] is indeed finished, we should see 5 intermediate degree waves up that would finish [C], thus completing the double zigzag and cycle b.

Targets include [C] = [A] at 1172.50, while [C] = 61.8% of [A] at 1060.25, which is the minimum upside objective. The 78.6% retracement of a is at 1146.25.

Notice how the channel provided support and turned price higher.

I see no cycles of importance for the upcoming week ahead.

All prices basis continuous contract.

WHEAT
Like the rest of the grains, the wheat market had a big upside week. It actually had 4 consecutive winning days in a row. This hasn't taken place since May.

My interpretation of structure has wheat completing minor 5 of intermediate (3) of primary [5] of cycle v at the 439.25 L. My alternate view is that primary wave [3] is still in process.

It is very possible that I'm behind in the count and this market in fact finished primary [5] at the 439.25 L.

One of my concerns is the fact that RSI has been big time divergent over the last several weeks (not shown on chart), which I have discussed in previous updates.

RSI actually registered its low on July 7. September 9th saw RSI make a higher low and has been trending higher since, while price continued to set multi-year lows.

Price tried to break out of the channel on Thursday, but was quickly rejected.

Also troubling, is the size of the retrace thus far. It came close to the 61.8% level, which would be considered "deep" for a 4th wave. Minor 5 was small in size, though it appears to have a clean structure.

486 is the line in the sand, as this is the price extreme of (1). Should price trade through that level, the structure will need to be reassessed.

Thursday's H-H cycle produced another H instead of the expected L.

The Sunday moon did wonders for the grain markets as a whole.

Bottom line - If my current count is correct, we should have 1 more leg lower that would put in an important bottom in this market. If by chance we have seen that low, price action will begin impulsing higher.

All prices basis continuous contract.