July soybeans made a double top between April 17 and 29 at 1521c and 1520 1/2c respectively. Since then the market has remained in a narrow trading range. This update shows a harmonic of Gann's 20 years cycle previously discussed in the soybeans roadmap for 2014. This cycle harmonic was due to turn around mid to late May 2014. Additionally, a short momentum analysis is presented.
July soybean futures cycle analysis
Figure 1 contains a daily price-time chart for July soybeans. It shows a harmonic of Gann's 14 years which aligned with the April 17 top. It also displays a harmonic of Gann's 20 years cycle. This cycle harmonic had a very rough window of tolerance from May 15th to 20th.
Today, the market broke above previous days highs and collapsed, closing at the bottom of the day.
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Figure 1
Daily prices for July soybean futures from 2013 to 2014. A harmonic of Gann's 14yrs cycle aligning with April 17 top (red) and a harmonic of Gann's 20yrs cycle (pink). |
Since January 2014, the market has reacted two times, in March and early May after the April 29th top. It is interesting to note that in both cases the market reacted 78 3/4c. This shows that so far the market has not exceeded in price the previous reaction.
Momentum
Figure 2 is a daily price-time chart for July soybeans together with three momentum curves, calculated for 1, 3 and 5 trading days. The faster 1-day momentum curve is diverging against the higher daily tops of the last days. This could be a confirmation that the market is due to decline.
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| Figure 2 Daily prices for July soybeans for 2014 together with momentum curves. Price and momentum divergence in May 2014. |
Conclusion
Even thought as we would like to see soybean prices going higher for the rest of the year, it seems the market is giving indications that it could continue with the decline started in April 2014.
A previous update explained the geometry which indicated the April 17th top. As well, the first update of May explained the geometry behind the top of April 29th. All these, together with the current analysis indicates that it is likely that the market could decline more in the recent future, [edit: unless Gann's 20 years cycle harmonic aligned with May 19th low, creating an acceleration bottom.]
Update 3: May 2014 for July Soybeans
Update 3: May 2014 for July Soybeans
Nadiel Outis
Grain Market Analysis
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