Let's get this out of the way early: I've unofficially changed the name of my blog to "Technically Speaking About Soybeans". As I look back over the last number of weeks I see a clear trend to my posts: If I'm not updating my thoughts on November soybeans I'm talking about the weakening U.S. dollar. Why? Because these two markets continue to move, continue to establish new technical signals worth talking about.
So bear with me as I discuss the latest developments for the new-crop November soybean futures contract.
If you go back to my post from January 16 ("Nov Beans Bullish - Again") and take a look at the conclusion, you'll see I was talking about the bullish crossover by daily stochastics below the oversold level of 20% (green circle on this morning's updated chart) signaling the start of a minor (short-term) uptrend. The last sentence shared this sentiment: I'm watching to see how fast the contract moves to take daily stochastics above the overbought level of 80% and in position for a bearish crossover. As it turned out, it didn't take long at all.
Last Thursday (January 25) the November contract climbed to a high of $10.15, beyond projected resistance near $10.10 3/4. This price marks the 76.4% of the previous minor downtrend from $10.24 through the low of $9.70 (discounting the USDA report spike low of $9.67 1/2 on January 12). However, last Thursday's close was below this resistance at $10.07, down a 1/2 cent from Wednesday's settlement. This lower close created the bearish crossover by daily stochastics above the overbought level of 80% (red circle) that I was looking for. Recall that a bearish crossover is when the faster moving blue line crosses the slower moving red line, with both above 80%. This is one of the signals I look for to confirm a change in trend; be it minor, secondary (intermediate-term), major (long-term), or even on a 5-minute chart for you day-traders.
Friday saw November soybeans fall further on follow-through selling, posting a low of $10.01. Using Fibonacci retracements as targets, initial support is near $9.97 3/4 (38.2%), then $9.92 1/2 (50%) and finally $9.87 1/4 (61.8%). How far Nov beans retrace short-term will depend in part on how fast daily stochastics (short-term momentum) move back to below 20%, keeping in mind markets tend to fall much faster than rally. By this time next week we could be looking at another possible buy signal in November soybeans.
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