Commodities, Bear Markets And Corrective Declines Oh My!

What is the answer to this?

If a commodity completes a primary cycle crest at 33.50 in a bear market but then declines to a major cycle trough at 28.60, what is the price target of a corrective rally to the crest of the next major cycle?

This is certainly a head scratcher. Or at least it was for me. But luckily I was provided options to select from. The possible answer was:

31.05 +/-.58
31.05 +/-.29
38.40 +/- 1.15
38.40 +- .58

Yikes.

My first thought was that it was 31.05 +/- 0.29. But for some reason it didn't sit right with me.

I thought about it further. In any bear market, a corrective rally to the crest of the next major cycle typically retraces about 38.2% of the prior decline.

I decided to put pencil to paper or fingers to calculator.
I took 33.50 − 28.60 which equals 4.90

38.2% Fibonacci retracement:
4.90 × 0.382 ≈ 1.87

Add that retracement to the major cycle trough:
28.60 + 1.87 ≈ 30.47

Allowing for a normal trigger band around the target gives a center near 31.05, with a relatively tight tolerance.

Among the choices, 31.05 ± 0.29 best matches a standard corrective rally trigger in a bear market. Or does it?

Nope, it does not. It's a little tricky right?

The 38.40 levels would imply a much deeper retracement, more consistent with a bull market advance rather than a corrective bear-market rally.

In a bear market, the corrective rally to the next major cycle crest is typically a 45–50% retracement, not a 38.2% retracement. That’s the key point.

Now apply that:

50% retracement of 4.90 = 2.45
28.60 + 2.45 = 31.05

So the price level is clearly 31.05.

Trigger Bands

Next is the trigger band. This the tricky part and has to do with the cycle rally and trigger range.

For a commodities primary or major cycle rally, the normal trigger range is wider than ±0.29.

A ±0.29 band would be unusually tight and more typical of a very short-term trigger, not a major cycle crest.

A ±0.58 band aligns with standard cycle trigger tolerances for a major corrective rally in commodities.

So the correct answer is:

31.05 ± 0.58 not 31.05 +/- 0.29

Let's Dig Deeper Into This Problem?

Is 31.05 a Fibonacci equation?

No, not really, 31.05 itself is not a Fibonacci number. There is an important distinction, 31.05 is the price result of applying a Fibonacci retracement ratio to a prior price move, not a Fibonacci number in isolation.

As an example:

High (primary cycle crest): 33.50
Low (major cycle trough): 28.60
Range: 4.90

When you apply a Fibonacci-based retracement to that decline:

50% retracement (commonly used in cycle work, though not a Fibonacci ratio):

28.60 + (4.90 × 0.50) = 31.05

So:

• The Fibonacci ratio is the percentage (38.2%, 50%, 61.8%, etc.)
• The resulting price (31.05) is simply the level produced by that ratio applied to the price range

That’s why people sometimes loosely refer to “Fibonacci levels” when they really mean “prices derived from Fibonacci retracements.”

The math uses Fibonacci ratios; the price itself is not Fibonacci.Primary cycle crest (high): 33.50
Major cycle trough (low): 28.60
Total decline: 4.90

23.6% retracement
28.60 + (4.90 × 0.236) = 29.76

38.2% retracement
28.60 + (4.90 × 0.382) = 30.47

50% retracement
28.60 + (4.90 × 0.50) = 31.05

61.8% retracement
28.60 + (4.90 × 0.618) = 31.63

76.4% retracement
28.60 + (4.90 × 0.764) = 32.34

What I Learned

• 30.47 (38.2%) would be a shallow corrective rally
• 31.05 (50%) is a textbook bear-market corrective rally
• 31.63 (61.8%) begins to challenge the bearish structure

That’s why 31.05 is the correct level for a normal corrective rally crest in my above scenario.

It's a long-winded answer but it's what I went through to get there.