V.2:2 (60-65): Price, Action and Resistance by Jesse H. Thompson

Price, Action and Resistance by Jesse H. Thompson

Origin, History and Recent Price Action

We can not obtain a full account of the "present position" (price potential), of any given stock or commodity without a review of its recent price origins, price history and price action. And a wider perspective is possible only by considering a greater time frame than is normally provided in the limited space of most chart services. Hence, the great value in keeping your own longer term charts on each vehicle you monitor.

The cycles of supply and demand are characteristically shorter for commodities than stocks both because commodities are so much more perishable and because the consumer demand for them is more immediate. The great secular movements of supply and demand usually run 2-4 years in commodities and much longer in stocks.

In this article, we will analyze the "present position" of the November 84 Soybean contract relative to price origin, price history and recent price action.

Price Origins and History

The first point of price origin that is relevant to the "present position" dates back to the last pulses of the most recent secular bear market low. This point is the 518 major low which occurred on 4 Oct 82 in the November 1982 contract (Chart A, Point A). Note that 518 was the final low of the major bear market extending downward from the 930½ major top of 5 Nov 80. This great bear's price history consisted of five great swings downward, culminating at 518. The price history after the 518 low consists of two great swings up to the 968½ major top of 13 Sep 83 (Chart A, Point B).

The downturning from the 968½ top, and the subsequent reaction establishes the 968½ top as the second major point of origin relevant to the "present position".