October 10, 2008
CBOT November soy still in solid downtrend
CBOT November soy futures have just seen a short-covering bounce from the 13-month low of US$9.11 a bushel scored on Wednesday (October 8) morning.
Price action Wednesday also scored a bullish "outside day" up on the daily bar chart, whereby the high was higher and the low was lower than the previous day's trading range, with a higher close. The short covering can also be attributed to position-squaring ahead of Friday morning's USDA crop production report.
However, November soy futures prices are still mired in a three-month-old downtrend on the daily bar chart, from the July contract and all-time high of US$16.36 3/4 a bushel. For the bulls to negate that downtrend line they would have to push prices above the last "reaction high," which is located at the mid-September high of US$12.12 1/4 a bushel. Below that last reaction lies strong psychological resistance at US$10.00 a bushel and the solid chart resistance at US$10.50 and then more psychological resistance at US$11.00 and US$12.00 a bushel.
The soy market bulls have some heavy lifting ahead of them to get back on a solid bullish technical foundation. The bears still have the overall near-term technical advantage. The bears would gain fresh downside near-term technical momentum by producing a close below strong chart support at this week's low of US$9.11, basis November futures.
Importantly, it does appear that grain market traders are at present paying a bit more attention to the technicals and fundamentals in the grain markets, as opposed to focusing mainly on the "outside markets" - crude oil and the value of the US dollar, as had been the case in recent weeks.