Technically Speaking

A couple of weeks ago I posted a blog talking about some of the bullish signals being seen in July soybeans (April 20, "July Beans Still Bullish"). However, as a new month begins those bullish signs aren't quite as clear as they were before.

To begin with, the early stages of a promising uptrend seemed to collapse as the contract tested price resistance at $14.11. This marks the 33% retracement level of the previous downtrend from $16.05 3/4 through the initial low of $13.31 3/4. Since testing that resistance this past Monday the contract has quickly fallen back to longer-term support at $13.74 1/4, a price that marks the 50% retracement level of the uptrend from $11.43 1/4 to the previously mentioned high.

Also note that weekly stochastics (second studies) are bearish again with the faster moving blue line sliding below the slower moving red line. And while the bullish crossover (blue line moving above the red line with both below the oversold level of 20%, indicating a move to an uptrend) is still in effect, this week's action shows the market is not ready to break out of its ongoing consolidation phase.

A concerning pattern to market bulls is still the series of lows from mid-November 2012, early January 2013, and late March 2013. Some would argue that this constitutes a triple-bottom formation, recalling the old adage that "triples are usually taken out". If this adage holds true in July soybeans, and using a simple measuring technique from the low of $13.31 3/4 through the interim high of $14.83 1/2 (a range of $1.51 3/4), then a bearish breakout of the low would project to a possible low of $11.80. Note that this would be a test of the low back in late November 2011.

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