Soybeans Update July 2015 (D,M)
Created on Saturday, 11 July 2015 01:11
Written by Austin Galt
The soybean price has launched higher off its low its May 2015 low of $920.50. We have been waiting for this expected rally which was laid out in analysis back in February 2015. That may seem a while but this is the monthly chart which can be hard to deal with for all the whippersnappers that find it hard to look beyond a few days.
Let’s review the technicals using the daily and monthly charts.
SOYBEANS DAILY CHART
We can see price rose from its low up to the November 2014 high in impulsive fashion. Since then the price action has been quite unremarkable. Boring even. The move up into that November 2014 high took around one and a half months while it has taken around 6 months correcting. Just that fact is often a sign that the trend is up.
I have added Fibonacci retracement levels of that first move higher and the recent low was right around the 88.6% level so it was a deep retracement which is common for the first correction in a new bull trend.
The Bollinger Bands show price clinging to the upper band in its most recent impulsive move higher. Price has just found support at the middle band and looks to be heading back to the upper band to go on with the job.
The Stochastic indicator has just turned bullish while the MACD indicator looks to be threatening to do the same.
Where is price likely to rally to? Let’s go to the monthly chart to try and answer that question.
SOYBEANS MONTHLY CHART
The Stochastic and MACD indicators have both made recent bullish crossovers and things look good from a bullish perspective.
I have drawn a Fibonacci Fan from the September 2012 high to October 2014 low. We can see the recent test was around support from the 23.6% angle. Price is now challenging the 38.2% angle and has found initial resistance. I expect price to bust through imminently.
As for how high the rally will trade, there are two angles that look good to the eye. The first is the 61.8% angle while I personally favour an even bigger rally up to the 76.4% angle.
I have added Fibonacci retracement levels of the move down from September 2012 high to October 2014 low and I favour a final rally high up around the 61.8% level which stands at $1454. A weaker rally will mean the 38.2% level at $1244 is one to watch.
I have drawn a horizontal line denoting the November 2013 low at $1255. This should act as resistance and this level is my minimum expectation for price. I expect price to trade above this level as it gives the resistance a thorough test. The only question I have is how thorough will that test be.
Finally, there looks to be a massive 5 point broadening top in play with the 2008 high point 1, the 2008 low point 2, and the 2012 high point 3. I think price is still tracing itself out on its way to a point 4 low. Once that low is in place in the coming years then price should explode to new all time highs and a final point 5 high.
Summing up, it is now rally time and there looks to be plenty more fun to be had for the bulls before the bear bites back.