Technically Speaking

The November soybean contract appears to be in the process of a bullish turn, one day after testing longer-term technical price support between $12.42 1/2 and $12.35 1/4. These prices mark the 61.8% (Fibonacci) and 67% (Dow) retracement levels of the previous uptrend from $11.86 1/2 (April 24, 2013) through the high of $13.33 (June 7, 2013).

This past Tuesday's low of $12.35 was followed by a modest rally into the close with the contract settling at $12.42 1/2. Daily stochastics (middle study) remained well below the oversold level of 20% with the faster blue line calculated at 9.4% and the slower red line at 12.3%.

However, as Wednesday's holiday shortened session gets under way (grain futures close at noon (CT)), November soybeans are showing a solid double-digit rally with an overnight high of $12.59 3/4, up 17 1/4 cents from Tuesday's close. At the same time daily stochastics are indicating a possible bullish crossover below 20%, meaning the faster blue line has moved back above the slower red line reflecting a bullish change in momentum.

If this holds through the end of the session, and particularly if it remains below the 20% mark, November soybeans could be looking at a move to a minor uptrend. Given the continued bullish commercial outlook implied by the weak carry in the November to January futures spread (bottom study), the November contract would be expected to see at least a 50% retracement of its previous downtrend. This creates a target price of $12.84, with an extended rally to near $13.00 (the 67% retracement level) also a possibility.

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