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The Class III milk market reveals a pronounced, three-year-cycle low pattern, which has become an accepted pattern of milk price behavior. Here’s a closer look at how price patterns have unfolded since 1996.
Carl BablerBy Carl Babler, Atten Babler Commodities
As a commodity price rally rolls over, and a trend or cycle price high is identified, attention shifts to evaluating how low prices may fall. A number of sophisticated technical price analysis tools are available for evaluating potential price objectives based solely on price and time data.
We have chosen another technical evaluation approach. Price-pattern history is a simple approach to evaluating forward price objectives fully based on price patterns of the past. The Class III milk market portrays a pronounced three-year-cycle low pattern, which has slowly become an accepted pattern of milk price behavior.
We will look deeper into the cycle pattern. See the chart below. The monthly Class III milk futures price shows the cycleâ€™s high and low price for all cycles since 1996. When looking at past price history of a commodity, it is often debated that fundamental factors have changed in a given market; thus, the patterns of the past are not relevant. Market participants often continue to discount price patterns even as those patterns continue to unfold.
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