In a previous post we mentioned that the January bottom in corn could be the beginning of a major bull market. In our understanding, price-time geometry analysis shows that this market will have great opportunities in the buying side from now and the coming years.
The December contract for corn is analyzed using PTVs[1]. It shows that a rally is due after the recent swing bottom. This bottom could be the end of this leg down and possibly the continuation of the current bull market.
December corn PTV analysis
Figure 1 is a daily price-time chart for December corn from 2012 to 2014. It contains the great bear market from 2012 to 2014 and the beginning of the current bull market. It shows several PTVs with lengths related to the first Square of Twelve.
Figure 1 Daily price for December corn futures from 2012 to 2014. PTV lengths related to the first Square of Twelve and the square root of two ratio. |
The complete bear market from 2012 ended in late 2013 in this contract, while the cash and other contracts bottomed in January 2014. Three major swings down defining the complete bear market from 2012 to 2013 were defined by PTVs with lengths related to the first Square of Twelve.
A first leg down was defined by a PTV equal to 147.96, or the first Square of Twelve, 144. A second leg down was defined by a larger PTV with length equal to 291.15 or two times the first Square of Twelve. The final leg down form June to December 2013 was defined by a PTV with length equal to 207.25, or the first Square of Twelve times the square root of two ratio, this is √2x144 = 203.65.
From the double bottom of November and December 2013 the market rallied. As previously stated this should be the beginning of a great bull market phase. The first leg up was defined by a PTV with length equal to 143.20, or the first Square of Twelve.
The more recent June 2014 swing bottom could be the end of the first reaction of this bull market which began in April 2014. This reaction is defined by a PTV with length 95.62. This is very close to the first Square of Twelve divided by the square root of two ratio, or 144/√2 = 101.82.
The PTV from the December 2013 bottom to the current June 2014 bottom measures 142.53, or the first Square of Twelve. Additionally, the PTV from June 2013 top to June 2014 bottom equals 288.18, which is two times the first Square of Twelve, completing after the anniversary from June 2013 and June 2012 turning points.
Summary
The current PTV analysis of the December contract for corn hints that prices could rally, resuming an uptrend which began late-2013 and early-2014.
The December contract made a swing bottom at 436 1/4c on June 17th and 436 3/4c on June 24th. This is a double bottom against the January 10th bottom at 435c which it is the third Square of Twelve, 432.
The length of the PTV
defining the reaction starting from April 2014 is close to be the first
Square of Twelve divided by the square root of two ratio. However, it was a little short. This means that prices could decline next week just a little but further below the recent swing bottoms to complete this PTV.
Those who are still on the short side of the market could consider tightening their stop loss orders to secure profits. This analysis shows that it is possible that the next leg up in this bull market could begin.
[1] PTV stands for Price-Time Vector. This concept was introduced by Bradley Cowan in his writings. Both PTV and Price-Time Vector are trademarks of Bradley Cowan.
Ricardo Da Costa
Grain Market Analysis
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