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A natural limitation exists in soybeans that does not exist in Treasury bonds; the potential intraday price move is larger in T-bonds than soybeans. All things considered, soybeans perform as well, if not better, than T-bonds in this type of basic test (Figure 2).

If the five-day patterns had similar biases in each market, that would suggest some consistency in price behavior from commodity to commodity. As it turned out, eight of the 32 patterns had significantly different biases, which suggests some difference in behavior exists between the two markets. Marked differences showed up in patterns 3,4, 15 and 17, which gave opposing buy/sell signals in the soybean and bond markets yet maintained reasonably high percentages of profitable transactions in both markets. The most profitable soybean winners in Figure 1 were sales (patterns 1,10,25 and 30). There were no buys over $10,000 gross profit. Percentage of winning trades seemed to favor the upside, but gross profits definitely favored short sales. T-bonds displayed a better balance in the category of gross profits. A trader should consider the percentage of profitable trades, the average win-to-average loss ratio and gross profits when assessing the validity of a pattern.

Soybean pattern 30, shown in detail in Figure 3, is a sale on day 5's open and tested better than most, especially in the average win/loss category — 59% of its 94 trades were profitable, with winners averaging $403 and losers averaging $210. Gross profits were $13,987.

An attempt to improve on this pattern produced some interesting results. If you find an expanding daily range on day 4 relative to day 3 (Figure 4), it accounts for 63 of the 94 trades in pattern 30. The number of profitable trades dropped to 51%, but gross profit was relatively stable at $8,206, since the average win was $421 vs. the average loss of $170.

Percentage profitability increases dramatically when day 4 is a narrowing range rather than an expanding range (Figure 5). This accounts for 30 trades with 67% profitability. Gross profits were $5,581, with a $445-to-$332 win/loss ratio. This is adequate but not nearly as rewarding as T-bonds. Figures 1 and 2 can serve as useful references. The best results come from small changes of the basic patterns. Range differences defining momentum and one-day patterns are very useful.

In summary, a trader can assume some patterns indicate a decisive bias from open to close in the soybean market. These biases were as distinct as in the bond market and showed that five-day patterns are more profitable on the downside. Generally, five-day patterns do not produce high profits but can still be used as a basis for system development. Keep in mind, however, that this type of system development has not proved to be as promising in soybeans as in other markets.