Yesterday, the USDA released the WADSE (World Agricultural Supply and Demand Estimates) report, which is a relevant mover in the agricultural market. Following this report, today we will take a fresh look at the soybean futures market.
The four-hour candlestick chart below shows the 52-week high and low made by the November futures contract this summer.
Yesterday’s pullback following the report bounced just below the lower yellow trendline. Last week, we anticipated support on the trendline last week; however, our view now is that the next test of that line will see price break that support and head down to the August $921.00 low, and possibly to the $907.00 contract low.
However, as long as price remains above the lower trendline we believe that it will test $977 (marked by the central red line), which is the 50% mark for this year’s range. We believe that the most likely case is for any market gains to be capped there over the next two weeks.
If the bulls do push above $977, then the logical and technical target becomes the big round $1,000 level at the blue horizontal line. This is supported by a confluence of technical history, including the major trendline shown in green drawn from this year’s high to a lower high, and the fact that $999 marks the August high. We are quite confident that this area will offer resistance on the first touch and likely continue offering resistance into October.
At this point, we remain bearish due to the technicals and overall fundamentals of this market, and we prefer to sell rallies or breakouts to the downside.