Soybeans - January 2016

This is our January 2016 roadmap analysis for soybean market. It presents a couple of Gann's cycle harmonics together with a simple PTV[1] analysis. Additionally, Velocity Price Projections and Momentum analysis are included.

 Cycle and Geometry Analysis

 Cycles

 Figure 1 is a daily price-time chart for March soybeans. It includes two Gann cycle harmonics as well as a series of PTVs.
 

Figure 1
Daily prices for March soybean futures 2015-2016. Gann's 14yrs (red) and 30yrs (magenta) cycles. PTV sum adding up to the second Square of Twelve.

 Gann's 30yrs cycle harmonic discussed in our 2016 soybean roadmap is included in color magenta. This harmonic is due to turn in late January or February 2016. A more detailed analysis of this harmonic will be included in another post.

 A harmonic of Gann's 14yrs cycle was projected to turn in early January 2016. According to our studies, this is not a major harmonic. Although its effect is sometimes important aligning with significant turning points.

 Geometry

 Figure 1 also shows a series of PTVs defining the market action since the August, 2015 bottom. The market has remained in a sideways motion since then. It is important to acknowledge that the sum of all four PTVs included in Figure 1 adds up to the second Square of Twelve, or 288. This is:

 ab+bc+cd+de = 76.5 + 83.82 + 65.12 + 62.77 = 288.21

 This fact, along with Gann's 14yrs cycle harmonic expected to turn during these days were an indication that a rally was due.

 Momentum analysis

 Figure 2 is a daily price-time chart for March soybean futures. It contains three momentum curves calculated for 1, 3 and 5 trading days.
 

Figure 2
Daily prices for March soybean futures 2015-2016. 1 and 3 day (black and red) momentum curves diverging against market action indicating the possibility of a rally.

 The chart shows that both the 1 and 3 days momentum curves, black and red respectively, are diverging against market action. This is that while the market is making lower bottoms, the momentum is making higher ones. This indicates the possibility of a rally.

 Velocity Price Projections (VPP)

 Figure 3 is a daily price-time chart for March soybean futures. This figure also includes the calculations of market velocity used to project possible price support and resistance levels.

 There are two calculated VPP shown in Figure 3 at 851 1/4¢ and 848¢. On January 6th, the market made a daily low at 852¢ and rallied from there.

Figure 3
Daily prices for March soybean futures 2015-2016. Velocity Price Projections at 851 1/4¢ and 848¢. Swing bottom on January 6th, 2016 at 852¢.

 Summary

 We had in mind publishing this blog post last week. It was impossible due to time constraints from our side. However its information is still useful.

 Cycle, geometry, momentum and VPP analysis indicated the possibility of a rally. In fact, at the moment of this writing the market has rallied almost 30¢ from the January 6th swing bottom.

 Figure 1 also shows two possible scenarios for the month of January. The first one is that from the current bottom, the market will rally into a late January-early February top which would align with Gann's 30yrs cycle harmonic. The second scenario considers that a reaction will take place after the current rally and Gann's 30yrs cycle harmonic will align with a bottom, from which prices should rally into June 2016.

 [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: Soybeans - January 2016 

 Ricardo Da Costa

 Grain Market Analysis