In our previous post we presented a soybean cycle analysis for the year 2015 including cycle turn dates for Gann's 45yrs, 20yrs and 14yrs cycles. In this post we complete the 2015 roadmap presenting a short PTV[1] analysis and a figure indicating a possible development of market action during 2015.
PTV and geometry analysis
Figure 1 is a daily price-time chart for cash soybeans from 2012 to 2015. It is an update of a chart presented here showing several important PTVs since the historical top of Aug-Sep 2012. The length of these PTVs are related to the third Square of Twelve.
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| Figure 1 Daily cash prices for soybeans at central Illinois from 2012 to 2015. PTVs lengths related to the third Square of Twelve (3x144) |
The length of PTV AB from the historical top of Aug 2012 to the Apr 2013 bottom measures 431.32, which is the third Square of Twelve,
AB = 3 x 144 = 432
PTV AC defined the decline from the Aug 2012 top to the Nov 2013 bottom. The length of this vector equals 613.23, which is related to the third Square of Twelve by the square root of two ratio,
AC = √2 x 432 = 610.94
Finally, PTV CD2F suffered vectorial partitioning. These PTV defined the market action since Nov 2013 until the top of May 2014 and from that top until the Oct 2014 bottom. It measures 314.96 + 652.66 = 967.62. This relates to the third Square of Twelve by the square root of five,
CD2F = √5 x 432 = 965.98
The above explanation was one of the reasons to believe that a bottom was being made in Oct 2014. Even though the market rallied into November, it remained sideways with strong resistance at 1040¢ per bushel. The reader is encouraged to review the major tops of April 1977, March 2004 and Dec 2009 which all took place around that same price level.
If the market continues declining and brakes the Oct 2014 bottom at 882 1/2¢ it would be a strong indication that prices will continue declining for the rest of the year. However, if prices brake above the Nov 2014 tops at 1040¢ it would indicate higher prices.
Soybeans roadmap for 2015
Figure 2 represents a possible scenario for soybean price action in 2015. It is a graphical representation to keep as a reference during the year. It focuses mostly on the timing related to the cycle turn dates presented in our previous post. In this case we are under the assumption that prices will follow the seasonal trend, which is not always the case.
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| Figure 2 Soybean roadmap for 2015. Suggestion of a possible price scenario and turn dates during 2015. |
This first scenario points to lower prices with final bottoms in Oct-Nov 2015. We may update this figure later in the year.
Summary
We have presented a complement to the first part of our soybeans 2015 roadmap. It included a vectorial analysis using PTVs and a graphical representation of a possible scenario for the year 2015.
Our initial assumption is that prices could further decline for this year with a top around mid-year and final bottoms around Oct-Nov 2015. Hopefully, prices will show a definite trend in the near future.
[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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