Canada Markets
Soybean Oil Showing Promising Technical Action
Since soybean oil's high of 60.02 cents/lb on the week of May 31, 2011, the December soybean oil contract has largely traded in a range-bound fashion, while the 38.2% retracement level of the original rally from 33.96 cents, beginning the week of July 6, 2009, to 60.02 cents (not shown) has been repeatedly tested.
This retracement level of 50.07 cents was tested during the week of September 26th, 2011 to the week of Dec 19th, 2011, then again in the weeks of May 21st through to June 18, and most recently the first three weeks of October. This support level was breached the week of Oct 29, 2012, where prices made a sudden move lower to the 46.99 level, which is the 50% retracement level of the original uptrend.
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As seen on the attached chart during the November 12 trading week, this 50% support level was tested and while trade did take place below this support level, the week's close was above this support. This week's trade began with a gap higher in November 19 trade, while in today's trade, best seen with a daily chart (not shown) trade was able to overcome the resistance of a short-term down-trend which began in mid-September, with the breach of the 48.10 cent price level and the November 20 close at 48.32 cents.
Another positive sign is the crossover of stochastic indicators while deep in over-sold territory, which may trigger additional technical buying and provide further lift to prices.
Cliff Jamiesoncan be reached at cliff.jamieson@telventdtn.com
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