Focus: Soybeans
Grains have growing seasons, and trends have slowing seasons. Trends obey momentum principles and experience periods of price expansion and price contraction. For more than a year, the grains (soybeans, wheat, and corn) have received much attention in the news as prices reached historic highs. Now, the trends in grains are slowing and weakening. We are likely to see periods of higher volatility on the lower timeframes (daily and hourly) as prices enter a period of range equilibrium. ADX (trend strength) has dropped under 25 on soybeans, wheat, and corn; this normally suggests a consolidation period with the potential for a downward drift in prices. The soybeans chart (below) below shows ADX under 25 and falling, despite price rising prices.
Chart Courtesy of TradeStation.
Dr. Charles B. Schaap is the author of ADXcellence —Power Trend Strategies. He is a full time trader of futures and equities. His website is www.adxcellence.com .
