Technically Speaking
Darin Newsom DTN Senior Analyst

Tuesday 02/11/14

Warning Signs in March Beans

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.

Source: DTN ProphetX

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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Commodity trading is very complicated and the risk of loss is substantial. The author does not engage in any commodity trading activity for his own account or for others. The information provided is general, and is NOT a substitute for your own independent business judgment or the advice of a registered Commodity Trading Adviser.

Posted at 3:13PM CST 02/11/14 by Darin Newsom
Comments (1)
Update: As expected, the March soybean contract came under pressure Wednesday, establishing a minor (short-term) double-top at $13.40 on its daily chart.
Posted by DARIN NEWSOM at 3:33PM CST 02/12/14
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