At first glance, soybean market bulls like the look of the March contract's daily chart. Tuesday saw the contract test Monday's pre-report high of $13.40, closing near its session high of $13.37 1/2. But a closer inspection shows possible short-term warning signs.
First, going back to Monday's session, March soybeans posted a bearish reversal. After posting its new high ($13.40), the contract took out last Friday's low of $13.20 before closing lower for the day. Tuesday's rally saw the contract struggle against the previous high, opening the door for increased noncommercial during the overnight session.
Lastly, daily stochastics are above the overbought level of 80%. As has been seen in the past, when March beans get above this level it tends to lead to a sell-off. Couple that with the contract priced near the high-end of the sideways range dating back to mid-September 2012, and the contract is vulnerable to a possible move back to the mid-point of the sideways range near $13.00, if not the low-end of $12.60.
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