ONE44 Analytics Soybean Update
Soybean still under the 38.2% rule
Using the nearby Soybean chart, we can look back to the June 2016 high that was 38.2% back up to the all-time high, this level was 1207.00. The 38.2% rule is, "Any market that holds 38.2% should go make a new low/high based on the current direction" In this case the break from the 2016 high took two years before it completed that projection of the new low. The lowest low since then was made on 5/13/2019 at 780.50. The rally from there sent the market up to 38.2% back to the 2016 high, this level was 942.00. Ideally it should go to make new lows based on the 38.2% rule mentioned above, but as always you have to watch all of the retracements back down, or up even when, in this case we are expecting a new low. The 38.2% rule also says that a slightly lower low and then getting back above that low, or failing to make a new low, you should then look for 61.8%. More times than not when it fails to make that new low/high it ends up hitting 78.6% of the move. This is what they hit when they made the 808.25 low on 4/21/2020. The rally from here did get up through 38.2% of the break at 860.00, a positive sign, but was unable to get above the 200 day average at 885.00. On this setback from the 200 day we will watch for 38.2% of the current rally at 852.00. Holding this would be a very positive sign and you should look for it to get above the 200 day average. Once they can clear the 200 day, there are two targets, the first is 920.00, this is because the 78.6% rule is, when you hold 78.6% of the move look for 78.6% the other way. The second target is 1045.00. This comes about because the break from 38.2% up at 942.00 never made a new low and when this happens you then look for 61.8% (1045.00). Failing to hold 852.00 puts this market on the defensive again and you should look for new lows.