RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

NOV CANOLA

Overnight’s break above 08-Oct’s 935.6 high reaffirms not only the uptrend from 09-Sep’s 849 low, but also the secular bull trend.  The hourly chart below shows that this continued strength leaves smaller- and larger-degree corrective lows in its wake at 895.9 and 849 that now serve as our new short- and long-term risk parameters from which to rebase and manage the risk of a still-advised bullish policy.

The daily log scale chart above shows today’s break above the past THREE MONTHS’ resistance that obviously confirms the merely lateral price action over this span as corrective/consolidative.  The likelihood that the rally from 09-Sep’s 849 low is the COMPLETING 5th-Wave of a massive 5-wave Elliott sequence from May’19’s 427 low warrants close scrutiny and requirement that the bull continue to BEHAVE LIKE ONE “up here” by sustaining trendy, impulsive behavior higher.  Failures below levels like 895.9 and certainly 849 would provide early threats to the bull and offer outstanding long-term risk/reward opportunities to the bear side.  But until and unless such specific weakness is proven, there’s no telling how high this suspected 5th-Wave can fly as the market, posting new all-time highs, has exposed a universe where there is NO RESISTANCE.  The only levels of any technical merit now exist only below the market in the form of former resistance-turned-support like the 940-to-920-area and prior corrective lows like 895.9 and 849.

These issues considered, a bullish policy and exposure remain advised ahead of further and possibly accelerated gains straight away with a failure below 895.9 required for short-term traders to step aside and for longer-term commercial players to pare exposure to more conservative levels.  In lieu of such weakness, further and possibly accelerated gains straight away are expected.

DEC SOYBEAN OIL

Given this still-bullish backdrop in canola, today’s bean oil recovery above 08-Oct’s 63.08 high and our short0-term risk parameter could prove telling for a resumption of this market’s secular bull trend.  This resuscitated strength leaves 12-Oct’s 58.52 low in its wake as the latest smaller-degree corrective low the market is now required to fail below to once again threaten the intra-range rally from 21-Sep’s 54.18 low and key long-term risk parameter.  But given the market’s resurrected assault on the upper-quarter of the four-month range- a condition that is still arguably resistant “up here”- odds are increasing that, just like canola, these past four months’ mere lateral chop is corrective/consolidative ahead of an eventual resumption of Apr’20 – Jun21’s secular bull trend that preceded it.

We will try to discern a smaller-degree bearish divergence in momentum prior to a sub-58.52 failure that might provide an early leg up on another intra-range relapse.  In lieu of such however, further gains, including a breakout above 08-Jun’s 67.06 high should not surprise.

On a broader scale, the magnitude of the secular bull trend is clear in the weekly (above) and monthly (below) log scale charts.  So too are threats to this bull in the form of waning upside momentum, historically frothy bullish sentiment and the market’s proximity to all-time highs and potentially massive resistance.  Until and unless this market re-proves weakness below at least the corrective lows and risk parameters identified above however, a resumption of the secular bull trend in at least the dec contract should not surprise.

These issues considered, traders are advised to return to a cautious bullish policy and exposure from the 63.50-area OB with a failure below 58.52 required to defer or threaten this call enough to warrant its cover.

RJO Market Insights

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