While it is too early to determine whether Tuesday marks a permanent turnaround for global oilseed and vegetable oil markets, there were some positive signals besides the higher close seen across the sector in Tuesday's trade.
Canola closed higher while reaching a two-day high, something not achieved in the past nine sessions. The benchmark June crude palm oil contract reached a fresh contract low on Tuesday, while printing an outside reversal bar on the daily chart, trading both higher then lower than Monday's range while closing higher, although well-below the session high. May soybean futures along with May soybean oil futures ended higher for the first time in five sessions.
As seen on the attached chart, May rapeseed futures in Europe closed higher for the first time in five sessions on Tuesday, while consolidating within Monday's range in sideways trade. What is interesting in this chart is the emotion seen in the move lower, with six runaway or continuation gaps in trade formed on the daily chart seen since the February high was reached on Feb. 18-19.
Gaps in trade are seen on Feb. 24, Feb. 28, March 6, March 9, March 12 and again on March 16, or throughout the entire move lower.
In Martin Pring's Technical Analysis Explained, he stated that "In almost all cases, some kind of attempt is made to fill the gap," which may be somewhat contradictory to the old saying that gaps always get filled.
The upper end of each of the six gaps can become points of resistance, according to technical analysis theory, which indicates the market has some work to do in order to move higher.
The lower study on the attached chart shows the old-crop/new-crop (May/Aug) spread narrowing this session, with old crop gaining strength relative to new crop. While one day does not make a trend, this bears watching.
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