This post starts where my last one left off.

My dilemma in that post was twofold. First, which hagopian to select, the actual hagopian from the 6th image in that post or the action reaction line from the 7th image. Secondly, was it likely for price to crash to the hagopian or action reaction or was it going to go sideways for a long time to hit whichever one it was targeting?

It seems both of those questions may have been answered this week.

I'm going to start with another fork I didn't post in that thread.

In the first image above, I had been watching that off and on, but I had recently become fascinated with the older, larger fork (1st image in the first thread) and just plain didn't focus on this fork which I would call a controlling fork just like the one from last week. It's just that this one is more recent and not as well developed. It may perhaps have more validity because as I mentioned last week, price has been hinting since nearly the beginning that it may be a little stronger than what that fork was indicating.

You can see that we have now bounced off the LML (lower median line) of this fork twice on the weekly chart.

In the second image above, I have zoomed in a little and added the current pendulum fork (solid blue) as well as the hagopian for that pendulum fork (dashed blue). You can see that price reversed precisely when it hit both the LML of the red controlling fork and the hagopian projection of the blue pendulum fork.

Last week I was of the opinion that back in November price had projected balance that was a bit lower than the LML of the pendulum fork and I thought it was likely we would therefore go significantly lower than what the technically correct hagopian shown here was projecting. I still think that's possible, but now having seen how price bounced off both the LML of the controlling fork and the hagopian of the pendulum, it's almost too perfect to ignore and I guess I'm now leaning towards us having already seen the short term lows (next couple of weeks) in Kansas City wheat.

So where does this leave us? Well, I'm cautiously optimistic right now for the short term. The "cautiously" part is still somewhat concerning to me in that it's still possible the action reaction projected in November could send us down to the $4.90 range on the front month. The "optimistic" part is that I think technically price has fulfilled it's obligations on this stretch down and would not be violating any major technical rules that I've learned about since I started studying if it were to have a decent rally here.

I think JonSCKs would have some bullish fundamentals to talk about and I think we're due for a seasonal rally as well. In my mind, it all seems to line up for a bit of a run here, perhaps all the way into March/April or even longer. I think on Monday I will check into some out of the money calls and see what they will cost me. I think I'll be shooting for a strike price in the $6.30 to $6.60 range (I don't buy/sell calls very often so I don't know the strike price intervals). The purpose of these calls will be to give me the courage to sell pretty much all of my expected production if price is able to reach the ML (median line) of the red controlling fork from this week or the LML of the blue pendulum fork. I will also be watching price very closely as it gets close to the action reaction line that was projected in November that I talked about in my last thread.

Finally, we can't forget about the fork from last year that's been a good guide since late 2012. I think it's getting close to the time when that fork will no longer have much relevance for what we're doing in KC wheat, but I'm still going to be watching price as it approaches the reflection of the amount it was able to stretch below balance this time around as shown by the circle and question mark in my third image above.