May 29, 2009

July soy futures at the Chicago Board of Trade Wednesday (May 27) hit an eight-month high of US$12.00 3/4 a bushel. Prices are in a steep three-month-old uptrend on the daily bar chart. The soy bulls continue to exert strong technical control over the market.

The next major upside price objective for the bulls is to push July futures prices above psychological resistance at US$13.00 a bushel, which would allow the bulls to proclaim "beans in the teens." That phrase has been in the grain trading lexicon for decades, and only came to fruition last year.

For July soy there is technical resistance located at this week's high of US$12.00 3/4 and then at the August 2008 low of US$12.27. Above that lies chart resistance at US$12.50 and then at US$12.62.

Importantly, from a Fibonacci technical perspective, there is strong technical resistance at the US$12.22 price level in July soy. That is the 50 percent retracement of the price move from the contract high of US$16.50, scored last July, to the low of US$7.96, scored in early December of last year. A push and close in prices above US$12.22 would be significantly bullish, from a Fibonacci perspective.

On the downside, solid chart support for July soy is located at US$11.75 and then at this week's low of US$11.51 a bushel. Multiple closes back below major psychological support at US$11.00 a bushel would dent bullish enthusiasm and begin to suggest a major market top is in place.