January Soybeans Still Trapped in a Downtrend

October 20, 2008 07:00 PM
    January soybean futures at the Chicago Board of Trade were under selling pressure again Tuesday morning, after experiencing a short-covering bounce the past three trading sessions. Prices remain in a 3.5-month-old downtrend on the daily bar chart, from the contract high of $16.48 scored in early July.
    The next downside price objective for the January soybean bears is to produce a close below strong technical support at last week's low of $8.38 1/2. The bean bulls would begin to regain some near-term technical momentum by producing a close back above major psychological resistance at $10.00 a bushel, basis January futures.
    Near-term technical resistance for January soybeans is located at Tuesday's high of $9.55 1/2 and then at last week's high of $9.72 1/2. Technical support is located at Tuesday's low of $9.15 and then at $9.00.
    From a Fibonacci technical perspective, the bulls have some very heavy lifting to do in order to repair recent chart damage. The 38.2% retracement level of the price move from the contract high of $16.48 to last week's low of $8.38 1/2 comes in at $11.48. The 50% retracement level of the same price move comes in at $12.44. It would take a push above the 50% retracement level to provide some bullish Fibonacci technical strength to January soybeans.
    From a seasonal study perspective, history does show the autumn of the year does usually produce a "harvest low" for the soybean futures market, and then prices rally into the end of the year.

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