Technically Speaking
Darin Newsom DTN Senior Analyst

Thursday 11/14/13

Waiting for the Close in Jan Beans

January soybeans have posted an interesting session Thursday, with all eyes now on where the contract closes. Early in the day the contract moved below Wednesday's low of $13.07 1/2 before posting a solid rally to a high of $13.21 1/2, well beyond Wednesday's high of $13.17 3/4. Those familiar with this blog will recognized this could be either a bullish outside day, indicating the market should continue to extend its minor (short-term) uptrend, or a possible key bearish reversal. It all comes down to where the contract closes Thursday.

Source: DTN ProphetX

Finishing above Wednesday's settlement of $13.15 would establish the bullish outside day, putting the next technical target near $13.28. This price marks the 50% retracement of the previous downtrend from $14.06 through the recent low of $12.50 1/2 (November 4). If the contract does extend its minor uptrend, daily stochastics (second study) would likely climb well above the overbought level of 80% setting up a potential bearish crossover.

If Jan beans close below Wednesday's settlement of $13.15 1/2, a completely different technical pattern emerges. This would be the key bearish reversal, signaling the minor trend has turned down. Midday readings show daily stochastics are already above the 80% level, opening the door for a bearish change in trend at any time. If Thursday does mark a short-term peak, the 38.2% retracement level of $13.09 3/4 has held relatively well, surprising given the continued bullishness of the commercial side of the market.

In regards to the latter, the January to March futures spread (bottom study) is trending sideways at an inverse of about 16 1/4 cents. While a sideways trend reflects traders are comfortable with the status quo, the fact the spread remains inverted indicates the status quo for commercial traders is still bullish.

Keep a close eye on the close in soybeans Thursday. It looks like it could be interesting.

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Posted at 12:12PM CST 11/14/13 by Darin Newsom
Comments (1)
Update: To begin with, the lead in was supposed to say "Thursday's" close, not "Wednesday's". My apologies. Anyway, the Jan contract faltered late in the day, closing at $13.13 1/2, down 1 1/2 cents for the day. As the blog discusses, this establishes a key bearish reversal on the short-term daily chart while daily stochastics are in an overbought situation. Both would suggest the contract could now turn lower. Keep in mind though that both the secondary (weekly) and major (monthly) trends in soybeans remain up.
Posted by DARIN NEWSOM at 1:46PM CST 11/14/13
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