Thursday, May 28, 2009

The Debts of the Spenders: Soy Futures Break 8 Month Highs

The overall tone in agriculture is that of a weakening dollar and stagflationary (inflationary?) fears. And yes, a lot of bullish clues were hidden in the COTs report. Other commodities that rallied are of course oil but also some of the softs such as cocoa and sugar. I am just regretting that I set my stops rather tight and took profit too early.

July CBOT Soy Maintains Strong Price Gains

July soybean futures at the Chicago Board of Trade Wednesday hit an eightmonth high of $12.00 3/4 a bushel. Prices are in a steep three-month-old uptrend on the daily bar chart. The soybean
bulls continue to exert strong technical control over the market.

The next major upside price objective for the bulls is to push July futures prices above psychological resistance at $13.00 a bushel, which would allow the bulls to proclaim “beans in the teens.”

That phrase has been in the grain trading lexicon for decades, and only came to fruition last year.
For July soybeans there is technical resistance located at this week’s high of $12.00 3/4 and then at the August 2008 low of $12.27. Above that lies chart resistance at $12.50 and then at

Importantly, from a Fibonacci technical perspective, there is strong technical resistance at the $12.22 price level in July soybeans. That is the 50% retracement of the price move from the contract high of $16.50, scored last July, to the low of $7.96, scored in early December of last year. A push and close in prices above $12.22 would be significantly bullish, from a Fibonacci perspective.

On the downside, solid chart support for July soybeans is located at $11.75 and then at this week’s low of $11.51 a bushel. Multiple closes back below major psychological support at $11.00 a bushel would dent bullish enthusiasm and begin to suggest a major market top is in place.

Source: CME News for Tomorrow
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