Sometimes like markets don't concur.

Since we, technical chartists, truly believe that all known factual information regarding production and consumption are reflected by price, we believe that the behavior of price yields more pertinent information of market direction than studying the fundamental reasons behind price movement.  Therefore, we are constantly looking for reoccurring price patters to appear in the movement of the markets.

We also say to watch like markets, because they have a tendency to go the same directions.

Commodity families often times will follow the same reoccurring price patterns as well, so if you see one commodity going long, it is likely other commodities in that family will go long as well.

But, in the same respect, if the Mexican Peso goes long, it should not have any effect on the price of rice in China.

Here is an example where two markets, Corn and Oats, followed the same reoccurring price pattern, very closely.  Giving you the feeling that this trend would continue, but then suddenly, the fundamentals took effect, and we see this rule being not only broken, but smashed.

Example: Corn begins a perfectly formed reoccurring triangle formation.

Example: Oats, following suit perfectly, with its own reoccurring triangle formation.

Wow, it's amazing how similarly these two markets have been traveling during the past year.  Oats have almost been following Corn tick for tick.  Now this is a very common occurrence, but wait; rules were meant to be broken and here's a perfect example of that rule being smashed.

Example: A picture perfect break down and out of the triangle pattern in corn.

Example: Oats, wow!  What a dramatic break up and out of the triangle formation.

On occasion, the rules get broken, and this is one example where Oats smashed the "follow the family" rule.  This information is good to know, so you can be aware that yes, you can take advantage of the fact that certain markets have a tendency to move together, but on the other hand, don't totally rely on it all the time, because sometimes it goes dramatically different.

Good luck!
LT

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