Last week was a breakout week for August soybeans. Prices surged $1.13 during the week to close at $11.34. Most of the advance came on Thursday, when soybeans rose 70 points. The bullish week in soybeans can in part be attributed to a weak dollar. Last week’s advance came after a month and a half decline. In June, soybeans closed at $1185 4/8, and then fell to a $9.76 close in mid-July, forming a falling wedge pattern (bullish). The daily chart shows how a strong +ADX of 49 was countered by a weaker –ADX of 33, allowing the buyers to regain strength. This can be seen in the +DMI which last week crossed over –DMI and closed at a strong 32. This allowed prices to break out of the wedge. Next week, there may be some weakness on profit-taking, but a retest of the June highs is a likely upside target.
Chart Courtesy of TradeStation
Dr. Charles B. Schaap is the author of ADXcellence—Power Trend Strategies and Invest with Success—Big Profits for Small Investors. Dr. Schaap is a commodity futures strategist and recognized authority in technical analysis of the financial markets. His website is www.adxcellence.com.
