RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

JUL SOYBEAN OIL

We’d like to draw traders’ attention to last Mon’s 79.39 Globex day-session low detailed in the hourly chart below.  Previously, we identified 25-Apr’s 78.00 corrective low as our short-term bull risk parameter.  As a result of the nicely developing potential for a bearish divergence in DAILY momentum as a result of last week’s price concession, last Mon’s 79.39 low stands out as what would be an initial counter-trend low, the break below which would CONFIRM that bearish divergence in daily momentum and break the uptrend from at least 01-Apr’s 67.52 next larger-degree corrective low.  The prospect that 28-Apr’s 86.69 high completed a textbook 5-wave Elliott sequence up from that 67.52 low is clear, but a failure below 79.39 is required to CONFIRM this count to the point of non-bullish action like long-covers and new bearish punts that could then use 28-Apr’s 86.69 high as an objective bear risk parameter.

The daily log chart above shows the POTENTIAL for a bearish divergence in momentum that requires proof of weakness below either a prior corrective low or an initial counter-trend low.  Per above, last Mon’s 79.39 low would constitute an initial counter-trend low, if broken.  And while 7939 is a smaller-degree risk parameter, its importance cannot be emphasized enough given the extent and uninterrupted nature of Apr’s rally that left nothing in the way of former battlegrounds that can now be looked to as a support candidate shy of early-Mar’s lower-75-handle-area resistance-turned-support.  And given the magnitude of the secular bull market, commensurately larger-degree weakness below 01-Apr’s 67.52 larger-degree corrective low remains arguably required to break even the portion of the secular bull trend from 15Dec21’s 67.52 low, let alone threaten the TWO-YEAR secular bull from Apr’20’s 28.23 low.

From a long-term perspective, it is acknowledged and accepted that we cannot conclude a major peak/reversal threat from proof of only relatively short-term weakness below 79.39.  But against the backdrop of historically skewed bull sentiment/contrary levels shown in the weekly log chart below, we believe a failure below an admittedly short-term risk parameter like 79.39 defers or threatens the secular bull trend enough for even longer-term commercial players to at least pare bullish exposure to more conservative levels and certainly for shorter-term traders with tighter risk profiles to take profits and move to the sidelines.

These issues considered, a bullish policy and exposure remain advised with a failure below 79.39 required for shorter-term traders to take profits and move to a neutral-to-cautiously-bearish stance and for longer-term commercial players to pare bullish exposure to ore conservative levels OR neutralize exposure altogether and acknowledge and accept whipsaw risk above 87.65 in exchange for deeper nominal risk below 67.52.

DEC SOYBEAN OIL

The technical construct in the Dec contract is identical to that detailed above in Jul with last Mon’s 72.41 Globex day-session low considered our new short-term but key risk parameter around which directional biases and exposure can be objectively toggled.  A failure below 72.41 would expose AT LEAST a larger-degree correction of Apr’s 62.53-to-78.09 rally and possibly a major reversal lower.  Such sub-72.41 weakness would be sufficient for shorter-term traders to move to a neutral-to-cautiously-bearish stance and for even longer-term commercial players to pare or neutralize exposure in order to circumvent the depths unknown of a large-degree correction or possibly a major reversal lower.

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