Soybean Bears Gain Technical Momentum as Feb. Break Looms

February 2, 2009 06:00 PM
    March soybean futures at the Chicago Board of Trade on Monday hit a fresh four-week low of $9.43 1/4. Price action on Tuesday is poised to take out on the downside that price level.
    The bears have gained fresh downside technical momentum in the soybean futures market--right at the time when the "February break" seasonal price decline phenomenon is due.
    Recent price action in March soybean futures has seen an uptrend from the December low negated as prices have "rolled over" and are now in a three-week-old downtrend on the daily bar chart.
    Also negative is the posture of the Moving Average Convergence Divergence (MACD) index overlaid on the daily bar chart for March soybeans. The MACD line of the indicator has recently crossed below the "trigger" line, which is a bearish technical signal. Also, both lines are now trending lower, which is another bearish clue. In fact, the present posture of the MACD indicator is similar to that seen in mid-July of 2008. Just after mid-July, March soybean futures embarked upon a steep price downtrend that shed several dollars a bushel from prices.
    The next downside technical objective for the soybean bears is to push and close March futures below major psychological support at $9.00 a bushel. The next major upside price objective for the bean bulls is to produce a close above strong technical resistance at the January high of $10.60 1/4. Below that price level does lie major psychological resistance at $10.00 a bushel, basis March soybeans.

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