Technically Speaking
Darin Newsom DTN Senior Analyst

Friday 11/22/13

Jan Beans' Bullish Signals

Soybeans are bullish. That should be enough to set the market on a long-term uptrend, but as anyone who has watched knows, it hasn't been. Contracts continue to fluctuate between bullish and bearish, rallying only to fall again, all while the last major (long-term) technical signal and 2013-2014 forward curve (series of futures spreads reflecting the long-term commercial outlook) remain bullish.

Source: DTN ProphetX

That is until this week. A look at the weekly chart for the January contract shows another bullish outside week, confirming the previous bullish reversal established the week of November 3 (note that the low of this pattern, $12.47, was a test of support calculated near $12.48). Both patterns would indicate that the secondary (intermediate-term) uptrend should begin to strengthen. If so the next upside target is pegged near $12.45 1/4, a price that marks then 61.8% retracement level of the previous downtrend from $14.06 through the previously mentioned low of $12.47.

Those familiar with my analysis will make the connection that a secondary uptrend tends to reflect increased noncommercial buying interest, a factor that would seem to be confirmed by weekly CFTC Commitment of Traders numbers (bottom study, blue histogram). Friday's report (positions as of Tuesday, November 19) showed this group increasing their net-long futures potion to 143,162 contracts, up 13,198 contracts from the previous week.

Continued bullish signals on the weekly chart are in step with the bullish key reversal seen on the market's major (long-term) monthly chart back in August. And with one week left in November the January contract is nearing a secondary bullish outside month, needing only to close above October's settlement of $12.66 1/4. The contract closed this week at $13.19 1/2.

The bottom line is that soybeans continue to grow more bullish, but will need to see renewed noncommercial buying in the coming weeks to move the market toward its next major price targets of $13.71 and $14.75 3/4.

To track my thoughts on the markets throughout the day, follow me on Twitter:\DarinNewsom

Posted at 3:49PM CST 11/22/13 by Darin Newsom
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