soybeans8.27.14

Classic Technical Trading Patterns by Lundy Stafford Hill

Soybeans have fallen dramatically lately. Have they reached a bottom? Is this the time to buy? Here I will tell you why, I believe, now is NOT the time to go long.  Is it time to go short?  Here I make the case that soybeans still have some downside action left. Possibly plenty left.Above is the continuous chart of soybean futures going back four years. Soybeans peaked in the summer of 2012 at 1792. This peaked formed the “head” in a multi-year Head and Shoulders top pattern. The neckline of the pattern is shown. It was broken this summer.  The distance from the top of the head to the neck line is from 1792 to 1152. Or, 640. Projecting that amount DOWN from the neckline break at 1242 gives us a price target of 602. I like to us a 75% target. So, 75% of 640 wave projection is 480. This yields a target of 762.

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