The March canola contract gained $13.90 metric ton (mt) for the first day of trade this week to close at $669.20/mt, the largest one-day move since Dec. 7. Overnight trade reached a low of $652.10/mt, the weakest trade seen since the $651/mt low on Dec. 15.
Today's trade resulted in a bullish outside bar formed on the daily chart, trading both lower and higher than Friday's range, while reaching its highest trade seen in seven sessions, also a supportive technical sign that could signal a change in trend.
Today's trade has also eclipsed the $12.30/mt range traded over the previous week, although what is now shown to be a bullish outside bar on the weekly chart cannot be determined until Friday's close for the week. A higher weekly close would not only confirm this signal but also signal the first higher weekly close in seven weeks.
Nearby resistance on the chart is seen at $673.80/mt, the contract's 20-day moving average, which has not been tested since Nov. 30. Retracement resistance, or the 38.2% retracement of the move from the August high to December low, is seen at $719.40/mt, a long way off!
The middle study shows the March/May futures spread narrowing to minus $7.60/mt, a significant improvement since reaching minus $9.30/mt on Dec. 18 and 19 and the narrowest or strongest close on the daily chart since Dec. 13 when this spread reached minus $6.80/mt. Note that this spread reached minus $6.80/mt this session, tied for the narrowest trade this month, although weakened late session.
The histogram bars on the lower study increasing their bearish net-short futures position over the week ending Dec. 19 for a third week to a record 118,760 contracts, 25.6% larger than the four-week average. While bearish, any sudden change in sentiment could result in a bullish outcome.
Cliff Jamieson can be reached at email@example.com.
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