Fundamentally, the soybeans are no doubt in a weather market in my view. According to a great Bloomberg article today, "Damage from flooding and hail may cut planted area for corn and soybean by 2 million acres, Michael Cordonnier, the president of Soybean & Corn Advisor Inc. in Hinsdale, Illinois, wrote in a report today." So if expectations like that heading into the report are not met, then we could see the falling knife continue in the beans.
However, as they say on LaSalle Street in Chicago where the Chicago Mercantile Exchnage pit is located, "Rain Makes Grain." So I'm in the Bear camp. If expectation are not met and we get a much lower acreage number for soybeans on this USDA report on June 30, I would expect further declines in prices or maybe sideways action even.
Technically, I have added my favorite technical indicators to this chart below. They are the 9- (red line), 20- (green line), and the 50- (blue line) day Simple Moving Averages or SMA's. I have also added Bollinger Bands or BB's (yellow lines) and Candlesticks (the red and green bars with the wicks). These few technical indicators tell me 8-10 different characteristics about the market at a quick glance so I have them saved on my charts in MARKETHEAD, so they can populate a chart at the click of a mouse.
My favorite technical indicators show me that soybeans are in what I have coined a "SUPER-TREND" down that started on June 9th when the 9 day SMA (red line) crossed down and under the 20 day SMA (green line) as both indicators pointed sharply lower and the market traded below the 9 day SMA. This now makes the 9 day SMA the critical resistance area for the "SUPER-TREND" down to remain in full effect. Currently the market traded up to the 9 and held. We will see if it goes on to make new lows from here. I believe the 9 day SMA will hold and the market will go on to make new lows and the "SUPER-TREND" will remain in full effect.
The most important technical that I have added to this August soybean chart is the Royal Blue arrows that form what I call a Symmetrical Triangle. You should look it up. To me it is one of the most reliable indicators that I have found. Nothing works 100% of the time as we know, but I like this one. Not always, but typically Symmetrical Triangle formations come out of the formation in the direction of the trend before the Triangle was formed. Clearly in this case, the trend was down before the Symmetrical Triangle formed. So I expect the market to continue lower as we break out of his formation.
Chart by eSIGNAL
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