Chicago Board of Trade soybean futures fell 1.64% Friday to close at $10.80. The contract closed the day at the opening price, a highly significant intra-day price pattern according to Japanese candlestick charting theory. When we examine the specifics of Friday's trading: a highest intra-day price no higher than the lowest price reached during Thursday's trading; a decline of more than 0.3% and a close in the upper 50% of the 20-day trading range, history shows this is typically a bearish signal for CBOT soybean futures.
Q: What happens to soybean futures after they close at the exact price at which they opened during a trading day in which their highest intra-day price is at best the lowest intra-day price reached on the previous trading day, and they close down more than 0.3% whilst being in the upper 50% of their 20-day trading range?
A: According to the eight previous occurrences of this event, EventEdge indicates that soybeans have shown a strong bearish edge that peaks 24 trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the most recent occurrence of the event (Friday, Nov. 30, 2007) is Monday, Jan. 7, 2008. Soybeans have declined in 100% of the cases (8 of 8) by an average of 8.5% relative to the close on the event date. The overall return of the eight cases is
-8.5%, which, based on the close on the event date ($10.80), provides a target price of $9.88'2.
If you would like to see more details of this historical edge, go to www.markethistory.com
Scott Murani covers European energy and commodity markets from London.
