This post is an update for our July 2015 soybean report. The market rallied since May-June 2015 into a possible top in July. This update includes a cycle and geometry analysis together with the velocity price projections and momentum curves.
Cycle analysis
Figure 1 is a daily price-time chart for November soybean futures. It is an update of a chart presented in our July 2015 roadmap. It shows the two time cycles that were projected to turn in late June-early July, namely Gann's 14yrs and 20yrs cycle harmonics.
 |
| Figure 1 Daily prices for November soybean futures. Gann's 14yrs and 20yrs cycle turning in late June-early July 2015. PTV[1] lengths and sums related to the Square of Twelve. |
November soybeans made a swing top on July 1st, 2015 at 1040¢ which was in accordance with our expectations. As is normal the market reacted, but in this case broke over July 1st top and reached 1045¢ on July 14, 2015. However, the cash market did not break its early July top.
It is still possible that the market will react and make a final seasonal top now. But there exists the possibility that Gann's 20yrs cycle may have aligned with the bottom of July 8, 2015, making it an acceleration bottom.
Also, we mentioned in our previous posts that a harmonic of Gann's 45yrs cycle was due to turn between June and July. The window of tolerance calculated for that cycle is very wide. This makes it difficult to pin-point when it is actually turning. It could have aligned with mid-June's bottom or it could align with a top right now.
The sum of the lengths of the PTVs drawn in green color ABCD2 equals the fourth Square of Twelve. This is:
which is exactly the fourth Square of Twelve or 4x144 = 576.
The fact that PTVs CD1 and ABCD2 completed gives a possible indication that a top formation is in place.
The fact that this price projection was reached at the time the PTVs mentioned above completed reinforces the idea that a top could be in place.
Even though the market didn't topped exactly as expected, if the market reacts and breaks the July 8th swing bottom, it would be a good indication that a top formation was completed on July. This would indicate that prices could decline for the rest of the year.
[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 2: Soybeans - July 2015
It is still possible that the market will react and make a final seasonal top now. But there exists the possibility that Gann's 20yrs cycle may have aligned with the bottom of July 8, 2015, making it an acceleration bottom.
Also, we mentioned in our previous posts that a harmonic of Gann's 45yrs cycle was due to turn between June and July. The window of tolerance calculated for that cycle is very wide. This makes it difficult to pin-point when it is actually turning. It could have aligned with mid-June's bottom or it could align with a top right now.
Geometry analysis
Figure 1 also contains several PTVs. The length of these PTVs is related to the Square of Twelve. The reader may want to review the PTVs drawn in red color, particularly PTV CD1 which defined the rally from June 15 to July 1st and measures 144.75 or exactly the first Square of Twelve.The sum of the lengths of the PTVs drawn in green color ABCD2 equals the fourth Square of Twelve. This is:
AB + BC + CD2 = 185.20 + 240.41 + 150.58 = 576.19
which is exactly the fourth Square of Twelve or 4x144 = 576.
The fact that PTVs CD1 and ABCD2 completed gives a possible indication that a top formation is in place.
Velocity Price Projections.
Figure 2 is a daily price-time chart for November soybean futures which also contains the market velocity chart. Figure 2 shows several price projections. One of these projections was met on July 14, 2015 at 1045¢. | |
| Figure 2 Daily prices for November soybean futures and market velocity calculations. A velocity price projection was reached on July 14, 2015 at 1045¢. Additional projections on the downside are shown. |
The fact that this price projection was reached at the time the PTVs mentioned above completed reinforces the idea that a top could be in place.
Momentum analysis
Figure 3 is a daily price-time chart for continuous soybean futures. The chart also contains the momentum curves calculated for 1, 3 and 5 trading days. From the figure it is possible to see that there is a bearish divergence between price and 3-day momentum curve (in red). The slower 5-day curve (in blue) is still not diverging, but most probably it will if the market definitely starts to decline. |
| Figure 3 Daily prices for continuous soybean futures ZS-067 and momentum curves. Bearish divergence between price and 3-day momentum curve. |
Summary
A discussion on the soybean market has been presented including cycle, geometry, price and momentum analyses. Our 2015 soybean roadmap indicated the possibility of a seasonal July top from which prices could decline until the Oct-Nov bottoms.Even though the market didn't topped exactly as expected, if the market reacts and breaks the July 8th swing bottom, it would be a good indication that a top formation was completed on July. This would indicate that prices could decline for the rest of the year.
[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 2: Soybeans - July 2015
Ricardo Da Costa
Grain Market Analysis
No comments:
Post a Comment