Beans Break Downtrend

October 24, 2016 3:29AM CDT

If overnight prices are indicative of where the Jan contract will open for today's Globex day-session, then the market will have confirmed the break of the major downtrend from 13-Jun's 11.82 high to 01-Sep's 9.40 low shown in the daily log scale chart below.  It is indeterminable at this juncture whether the recovery from that 9.40 low is just a slightly larger-degree correction or a major reversal higher, but the current fact of the technical matter is that Jun-Sep's downtrend has been broken, the longer-term trend has been exposed as up and that a relapse below new short- and longer-term risk parameters at 9.82 and/or 9.45 is now required to threaten or negate this new bullish call. In lieu of such weakness further and possibly steep gains straight away are expected.

Soybeans Daily \

The hourly chart below of Globex day-session process does not yet reflect today's overnight prices above 20-Sep's key 9.99 high, but assuming such 9.99+ strength this chart shows Thur's 9.82 low as the latest smaller-degree corrective low that now serves as our new short-term risk parameter the market is required to sustain gains above to maintain a more immediate bullish count.  Again, it is indeterminable at this juncture whether the rally from 13-Oct's 9.45 low is the c-Wave of just a slightly larger-degree bear market correction or the 3rd-Wave of a more significant reversal higher.  Given that the new longer-term trend is arguably up however, traders are advised to first err on the side of further and possibly steeper gains because we know exactly what level and risk parameter the market needs to fail below to threaten that call: 9.82 .

Soybeans 60 min

The weekly log chart below shows the bullish divergence in the rate-of-change measure of momentum resulting from today's break above 20-Sep's 9.99 initial counter-trend high.  At 83%, our RJO Bullish Sentiment Index remains high, but nowhere near as high as the frothy 98% reading back in late-Jun that warned of a considerable relapse.  Per such and as long as the market sustains gain above at least 9.82, this sentiment indicator is not considered one that will inhibit further and possibly surprising gains.

These issues considered, traders are advised to move to a new cautious bullish policy and first approach setback attempts to former resistance-turned-support at 10.00 OB as corrective buying opportunities ahead of further and possibly surprising gains.  A failure below 9.82 is required for shorter-term traders with tighter risk profiles to move to the sidelines.  A failure below 9.45 is required for longer-term players and hedgers to take defensive measures.

Soybeans Weekly


< Back to Articles & Videos

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.