In review of Goldman Sachs commodity index on a weekly time frame, price action from the year 2000- 2008 is regarded as an impulse that is recognized on the chart as an A, followed by corrective price action resulting in a triangle formation (ABCDE) from the year 2008 to 2020, end of which is marked by B. As the principle of market structure highlights the significance of (impulse, correction, impulse) in completing a market cycle. 2020 onwards to a foreseeable future it is expected that an impulse is in formation resulting in C leg that is projected in the chart. It is noteworthy that an impulse should have at least 5 waves with 2 and 4 being corrective legs, and 3rd being the strongest out of 5 waves as indicated in A leg of the structure. The uptrend of an A leg is followed by a corrective price action, in this case the corrective structure put in place consisting of (ABCDE) came into play as a triangle. A fib retracement of A leg found corrective support at .786 which in my experience is often institutional way of taking out stop losses before continuation of the trend, as witnessed a strong upward price action that broke out of triangle to continue the c leg, it’s worth highlighting that traditional target of breaking out of a triangle structure in in confluence with C leg target of a bigger trend. As C leg is of an impulse, it means there should be a minimum of 5 waves inside it as projected on the chart. Although the upward trend is intact on higher time frames, I believe we are in 4th wave of c leg, meaning a correction is due before continuation of an uptrend to give us the finish of c leg. The analysis above on higher time frames compliments the price action on smaller time frames as evident below. A corrective structure of ABC is in play in the 4th leg before continuation of the uptrend. One of the characteristics of 4th leg is that it should not go below .38 fib level of the entire move. Therefore, more downside is projected to complete the ongoing structure. Ideally, we would like to see a strong bounce at the .38 fib zone followed by sideways movement as a confirmation of continuation of an uptrend.
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As highlighted previously, the fourth leg is being played out very well. at the end of it is time to buy commodities to reached the fifth to the upside. Analysis intact.
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