Wheat Commodity Elliott Wave Technical Analysis

Since its peak in March 2022, wheat prices have undergone a significant decline, dropping nearly 61% from over 1360 to approximately 540. This notable decrease reflects a prolonged bearish cycle that has lasted for over 28 months. However, according to Elliott Wave analysis, this bearish phase appears to be nearing its end, indicating a potential start of a multi-month bullish phase. This expected upward movement could serve as a corrective phase, counteracting the extended period of selling pressure.

Wheat Elliott Wave Technical Analysis

Wheat Commodity Daily Chart Analysis

The daily chart reveals that the downtrend from the March 2022 high of 1364 has followed a well-defined impulse wave structure. This structure is now in its final stage, with the fifth wave approaching completion. The fifth wave, which began in May 2024, is currently forming what appears to be an ending diagonal pattern—a common pattern in the final stages of an impulse wave. The development of this diagonal suggests that the decline is losing momentum, and a reversal could be imminent. However, it's essential to consider that Wave (5) might still evolve into a three-swing structure before fully completing. This implies that while wheat prices could dip further, potentially reaching the 500 level or slightly below, the ongoing rebound could see prices rise to the 560-590 range before the sell-off resumes. This price action would align with the typical behavior of an ending diagonal, where a final push lower is often followed by a significant corrective rally.

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Wheat Commodity H4 Chart Analysis

The H4 chart provides a closer look at the sub-waves within Wave (5) of the diagonal structure observed in Wave 5 (circled) on the daily chart. This wave is expected to complete a corrective three-wave structure. The initial sub-wave, Wave A, appears to have completed a bearish impulse move from the peak in May 2024. Following this, the current bounce from the July 2024 low is identified as Wave B, which seems to be forming a corrective pattern. Early indications suggest that Wave B is developing into a double zigzag pattern, a complex correction often seen in Elliott Wave analysis. As long as the low from August 27th remains intact, Wave B could extend higher, potentially offering a short-term rally before the broader downtrend continues. This scenario highlights the importance of monitoring key support levels, as a breach of the August 27th low could invalidate the current corrective pattern and suggest further downside risk.

Technical Analyst: Sanmi Adeagbo

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Summary

While the long-term downtrend in wheat may still have room to continue, the market is showing signs of nearing a significant bottom, with the potential for a multi-month bullish correction on the horizon.

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