Canada Markets

November Canola finds Chart Support

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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November canola breached the lower support line of a channel on November 17 and closed lower for seven consecutive sessions prior to finding support at the contract's 50% retracement line on June 24 that led to a higher close. June 27 trade added to these gains to close above the contract's 200-day moving average. The lower study shows noncommercial traders paring their bullish net-long for a fifth straight week as of June 21. (DTN ProphetX chart)

The November canola contract slid for seven consecutive sessions from June 15 to June 23, with a plunge of $199.70/metric ton, while finding support on June 24 to rebound $25.50/mt followed by a further $19.20/mt gain on June 27.

It is interesting to note that the daily volume for November canola was 34,176 contracts on June 23, the highest daily volume seen over the life of the contract while leading to a drop of $67.40/mt for the session. Volume fell to 25,734 contracts on June 24 and further to 15,891 contracts on June 27, as selling interest waned and control shifted to the buyers.

Technical support was found just $0.80/mt above $809.80/mt on June 24, which represents the 50% retracement of the move from the contract low to the contract high. Psychological support may also lie close to the $800/mt level, while the June 27 trade led to a close above the contract's 200-day moving average for the first time in three sessions on Monday.

The blue histogram bars on the lower study show the noncommercial net-long position falling for five consecutive weeks to 16,152 contracts, or the smallest bullish position held since August 24, 2021. The size of this position has fallen by 57,903 contracts or 78% since the all-time high was reached in January of this year at 74,055 contracts net-long. While there are few years to act as a comparison, this position was just 1,349 contracts net-long for this week last year and 42,788 contracts net-short for the same week in 2020. Noncommercial traders continue to treat this as a bullish case, although less bullish than previously thought.

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