Jolly Green Giant: January Soybeans

January Soybeans

The January soybean market rose robustly in end of the week action. Today's range (TrueRange=open to close) was roughly 18 points (cents) measuring 1.618 of the daily 14 period average. The weeks TR was roughly 20 points and fell short of its average. During periods of escalating readings dating back to 2008 the week's average will measure around 50, twice it's current figure. The structure I'm observing appears to be an a-b-c corrective sequence which , I believe , will complete the Y wave of an WXY pattern. I contend we are in the early stages of the c wave of the final structure. My projection target comes at overhead convergence zone between 1055-1065. Settling the week at 990.4 the market could find near term resistance around 996. I'd expect a reaction off this level. In order for this price path to remain in play prices will have to hold above +/- 983. Timing cycles studies point to a mid December completion of my proposed scenario. With weekly and daily ATR's expected to expand by a multiple of roughly 2 it is in my opinion feasibly. The January term options are at depressed levels. The price of the 1010-1050 call spread is approximately 5.5. This instrument expires on 12/22 and if my assessment is accurate the spread value will be trading between 35 and 40. The risk reward calculates to a favorable 6.5 to 1. Below 980 in the futures would put the spread price at +/-4.5 depending on the time factor. If one we're to exit the trade at a stop loss price of 2.5, considering that the setup is in correct, that would equate to close to a 15 to 1 ratio. Please feel free to contact me at Walsh Trading to discuss this and other proposed strategies.

My analytical breakdown focuses on a blend of wave pattern recognition, long and short term geometrical extensions and momentum signal interpretation. Please feel free to contact me at Walsh Trading to discuss this and other proposed strategies.

Please join me next Wednesday as I apply Wave Theory and Geometric targets levels to this and other commodity markets.

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John Lunney

Senior Technical Analyst

Walsh Trading

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