Soybeans Suffer Technical Damage

12:00AM Jul 21, 2008
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    November soybean futures at the Chicago Board of Trade on Monday fell to a fresh six-week low of $14.12 as of this writing. Price action Friday and Monday did produce a downside "breakout" from a bearish descending triangle pattern on the daily bar chart. The measuring implications of this particular descending triangle pattern suggest a downside price objective near the $13.20 area.
    The soybean bears have gained fresh downside technical momentum recently and prices are in a steep downtrend from the contract high of $16.36 3/4, scored in early July.
    Solid technical support for November soybean futures lies at the $13.75 area. A close below that price level would produce even more near-term chart damage. Below that lies chart support at $13.50.
    For the bean bulls to begin to regain some solid upside near-term technical momentum they would have to push and close November soybeans above major psychological resistance at $15.00 a bushel. Below that price level lies technical resistance at Monday's high of $14.46 1/2, at $14.50 and then at $14.81.
    From a Fibonacci technical perspective, the $14.12 level marks a 38.2% retracement of the price move from the April 1 low of $10.45 1/4 to the contract high of $16.36 3/4. The more important 50% retracement level of that same price move comes in at $13.42. A close below the 50% retracement level would produce very serious chart damage to suggest a major market top is in place.

If you are interested in technical analysis in markets, I have a free e-book that I'll email back to you if you send me an email at [email protected] . It has about 10 short chapters of some of the technical wisdom that I've gained through nearly a quarter century of being a student of the markets.--Jim