On May 01, we commented the exhaustion signals of the bearish cycle in the agro-commodities group. In this post, we’ll review what to expect from soft commodities for the coming weeks.
DBA – What’s happened after the record lows?
On May 01, we commented that the downward cycle should end soon. The main signals were the decline movement combined with the decreasing volume. Those factors drove to the price at $15.42, from where the price found buyers. The agro ETF completed an upward five waves sequence finding resistance at $16.92. The higher volume showed when the price reached the $16.92 level, suggests that this zone should correspond to an exhaustion level.
The following movement expected for DBA is a retracement in three waves. Remember that depending on the deep of corrective move, should be the extension of the next step. We have to expect for the wave 2 completion to make the wave 3 projection. The invalidation level for the bullish scenario is at $15.42
Soybean -Pending bullish targets
The Soybean (ZS), in the same way, that the sectorial reference ETF, developed a five waves sequence. The price found buyers that moved up the price from $791 to $928 on June 18. The grain could make a marginal bullish move to the area between $931.2 to $947.2, from where ZS could find sellers. The corrective move could be in three waves to the region between $852.3 and $830.4. After this move, the price should create a new connector creating a new bullish cycle, likely with the eyes placet at the $1,000 zone. The invalidation level for the bullish cycle is at $791.
Remember that the price is not forced to move as our outlook indicates. The charts delivered corresponds to the Elliott Wave Theory application.