Our analysis of the cash soybean market indicated that a geometric cubic structure completed in Nov-2013. Additionally, an important Gann's 45yrs cycle harmonic aligned with Nov-2013 bottom. This was indication of a rally and much higher prices in the cash soybean market.
We pointed out in our soybean roadmap for 2014 the months of January, May and November as important for trend changes in the soybean market. We initially considered that the high of the year could be made from mid to late May reaching much higher prices.
Cash soybeans topped out in May 22nd, 2014 but not reaching our initial price targets. Prices have drastically dropped since the market topped in May. This proves that we clearly underestimated that top.
The current post will briefly address our initial train of thought regarding the cash soybean market and why we expected higher prices.
Cash soybeans cycle and PTV analysis
Figure 1 is a weekly price-time chart for cash soybeans at Decatur, Illinois from 2006 to 2014. It shows the harmonic of Gann's 45yrs cycle which aligned with Nov-2013 bottom and its harmonic due to turn in Nov-2014. It also contains the harmonics of Gann's 20yrs cycle aligning with the recent top in May 22nd. These cycles were initially presented in our 2014 roadmap for soybeans.
 |
| Figure 1 Weekly cash prices for soybeans at central Illinois from 2006 to 2014. Harmonics of Gann's 45yrs and 20yrs cycles. A PTV projection from 2008 to 2014. |
Our analysis of market geometry indicated that starting at the Dec-2008 major bottom a PTV[1] of size 12x144 = 1728 could complete this year. We drew a price-time circle, shown in Figure 1, which allowed us to see the equivalent points in price-time space that would fulfill this condition.
Our initial thought was that if a major top was to be made in May-2014, aligning with Gann's 20 years harmonic, it could complete this PTV taking prices above 1800c per bushel. Although the market topped in May, it did not meet our price or PTV projections. As mentioned above, this fact led us to underestimate this top, reasoning that the market would react and shortly after continue it uptrend.
Although our analysis indicates that prices could eventually get higher, we could be wrong and the market could continue to decline. Figure 1 indicates that if the market happens to rally reaching a new yearly high in November 2014 (which should be a very important turn date according to cycle analysis, either top or bottom) this projected PTV could complete taking prices above 1600c per bushel. Our analysis of seasonal tendency for soybeans indicates that after a May top prices most likely decline into an October low. Otherwise prices decline until August or September.
We are going to take a short break from writing this blog. We will watch the markets and resume our posting after a few days of rest. Thanks to all the readers, see you soon.
[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.
Update: Mid-2014 Soybeans Cycle and PTV Analysis
Update: Mid-2014 Soybeans Cycle and PTV Analysis
Nadiel Outis
Grain Market Analysis
No comments:
Post a Comment