January soybean oil closed lower for a second session Thursday while failing at the contract's 50-day moving average for a second day. January closed .38 cents lower at 52.26 cents/lb., a second consecutive daily loss. While not shown, the volume has decreased for a third session with the Nov. 30 volume the lowest seen in seven sessions.
The daily chart shows the potential for a head-and-shoulders top pattern formed over the past two weeks. The left shoulder was seen at the Nov. 15 high, the head at the Nov. 22 high and the right shoulder formed at the high reached Nov. 29. The upward-sloping blue line represents the neckline for this pattern, with support on this line currently seen at 50.37 cents, just above this week's low.
A breach of this support could lead to sell-stops triggered and increased selling, which could lead to a further drop of 3.83 cents to 46.54 cents, taking out the recent Nov. 8 low and representing the lowest trade in five months. This drop is calculated based on the distance between the neckline and the top of the pattern's head. Such a move would see the price near the 44.59 cent low reached on the continuous active chart in May, which is the lowest trade seen since February 2021 or over two years.
The first study shows the stochastic momentum indicators showing signs of rolling over. The lower study shows the January/March futures spread, which remains at a modestly bullish inverse of .22 cents, a modest recovery from the weakest spread seen in three weeks.
Cliff Jamieson can be reached at firstname.lastname@example.org.
Follow him on X, formerly known as Twitter, @CliffJamieson.
(c) Copyright 2023 DTN, LLC. All rights reserved.