Update 3: Soybeans - May 2015

The May and July contracts for soybeans futures broke the October 2014 bottom. This is in line with our initial thought that prices will continue to decline during this year, hopefully until a Oct-Nov 2015 bottom.

 Our May roadmap presented three cycle turn dates for the month. Gann's 14yrs cycle harmonic for early May which aligned with a market top. Also Gann's 20yrs cycle harmonic for May/15-25 and Gann's 30yrs cycle harmonic for late May, early June.

 This post addresses the current Gann's 20yrs cycle harmonic together with geometry and momentum calculations.

 Cycle Analysis

 Figure 1 is a daily price-time chart for July soybean futures. It shows the three cycle harmonics turning in May 2015 as shown in our May 2015 roadmap and Gann's 14yrs harmonics aligning with a top in early May 2015.

 

Figure 1
Daily July soybean futures from 2014 to 2015. Gann's 14yrs, 20yrs and 30yrs cycle turning in May 2015. PTVs lengths related to the third Square of Twelve.

  

 As mentioned above, Gann's 20yrs cycle harmonic was due to turn last week. On Friday May 22, 2015 July soybeans declined even further breaking the Oct 2014 bottom. This was done during this cycle window of tolerance.
 

 Geometry Analysis

 Figure 1 also contains several PTVs[1]. The lengths of these vectors are related to the third Square of Twelve. The larger PTV extending from last year's top until the October bottom measures 608.34, which is the third Square of Twelve times the Square Root of Two ratio or,
 

 432 x √2 = 610.94

  

 The PTV defining the decline from July to October 2014 measured 219.49 which is half the third Square of Twelve. The PTV extending from the November 2014 top until last Friday's low on May 22 also measures 218, or half the Third Square of Twelve.
 

 Figure 2 is a daily price-time chart for July soybean futures from late 2014 until the present time. It contains the same cycles as Figure 1, but also several PTVs which lengths are related to the first Square of Twelve. This is an update from a previous chart presented in our May roadmap.
 

Figure 2
Daily July soybean futures from 2014 to 2015. Gann's 14yrs, 20yrs and 30yrs cycle turning in May 2015. PTVs lengths related to the first Square of Twelve.

 

 PTV ad defining the decline from November 2014 until late January 2015 measured 140.39, or the first Square of Twelve. Similarly, the length of the PTV cf which defined the decline from December 2014 until April 2015 was 148.31 or the first Square of Twelve.
 

 Additionally, the sum of PTVs ab, bc and cd equals the second Square of Twelve or 2x144. This is,
 

abcd = 95.04 + 78.61 + 114.88 = 288.53
 

 The sum of the remaining PTVs de, ef, fg and gh measures a little over the second Square of Twelve. This is
 

 defgh = 78.35 + 97.84 + 48.08 + 74 = 298.27
 

 Also, the large PTV from Figure 1 defining the complete decline from November 2014 until May 22, 2015 measures 218, which is 1.5 times the first Square of Twelve, or the musical fifth.
 

 Momentum Analysis

 Figure 3 is a weekly price-time chart for July soybean futures from 2014 until 2015. It contains the momentum curves calculated for 1, 3 and 5 bars.

 

Figure 3
Weekly July soybean futures and momentum curves for 1, 3 and 5 weeks. Price and momentum divergences indicating the possibility of a rally.

 
 The chart shows the price and momentum divergence which indicated the bottom and following rally in Oct-2014. Also, the 5 week momentum curve (in blue) has been diverging since April this year. The reader may observe that both the 3 and 1 week curves are also diverging against the price action; making higher bottoms while price makes lower bottoms.
 

 Summary

 The reader was already aware of Gann's 20yrs cycle harmonic turning last week. Additionally, we presented a geometry and momentum analysis indicating the possibility of a rally, even though prices broke the October 2014 bottom.
 

 Those on the short side could tighten their stop loss orders to protect profits in case the market rallies. Those looking forward to get into the buying side should wait until market action proves it is rallying.
 

   [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.

 Soybeans - June 2015

 Ricardo Da Costa

 Grain Market Analysis