Since the last major top at $1536 in May, the price of soybeans has been in a state of free fall, which led to $904 in the end of September. A sell-off of more than 600 figures in four months does not leave a lot of room for optimism. Nevertheless, the following two charts might provide enough reason to believe in an upcoming recovery, at least in the shorter term.
As you can see, soybeans prices rose by more than $180 from the bottom of $904, thus reaching $1085 in the middle of November. As always, we are interested in the wave structure of this advance. It could be counted as a five-wave impulse. The Elliott Wave Principle states, that every impulse is followed by a three-wave correction in the opposite direction. According to the chart, this rule is fulfilled by an A-B-C zig-zag retracement. The theory also says, that after every 5-3 cycle, such as this one, the trend should resume in the direction of the five-wave sequence. The price action in the blue rectangle seems to be confirming these expectations. Let’s take a closer look on a 30-minute chart.
And the 30-minute chart shows nothing else, but another example of the same 5-3 Elliott Wave cycle. This pattern is more than enough to convince every Elliottician he should expect more strength from the soybeans futures. Having two of them on different degrees almost makes it a “no-brainer”. If this labeling is correct, we should prepare for higher soybeans prices. Figures above $1100 should not be a surprise.
