Canola Holds Near Resistance
January canola continues to hold near the upper end of the range traded during the past 20 weeks, while continues to face chart resistance.
For the second time this month, canola has shown independent strength, with the January contract closing higher despite a weaker close in soybeans and soybean oil. The January contract settled $1.70/metric ton higher at $884.90/mt, bouncing from a level at-or-near support of the contract's 20-day moving average for a fourth session, calculated at $880.40/mt.
During the past six sessions, trade has reached a low of $880/mt, while trade has failed to sustain a move above $900/mt in four of the previous five sessions. Resistance also lies at $909.40/mt, the 38.2% retracement of the move from the contract's April high to September low. A breach of this level could result in a continued move to the 50% retracement, calculated at $951.70/mt, but this would require a move above the contract's 200-day moving average at $917.60/mt.
The brown line on the first study shows the January/March inverse strengthening $3.20/mt on Monday to close at $8.40/mt (January above the March), the most bullish or strongest inverse seen since Oct. 5, 2021 or more than one year. This spread traded as high as $9.90/mt this session, while note that the March/May closed at a weak carry of $1.30/mt and the May/July closed at a modest carry of $1.40/mt.
CFTC data as of Nov. 8, as seen in the blue bars of the lower study, shows the noncommercial net-short position in canola falling for a seventh week and to a modest net-short position of 1,326 contracts. This is the smallest bearish position held in 20 weeks, or since this group turned bearish in the week of June 28.
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