Soybean Meal Market Bulls Now Showing “Vital Signs”

December soybean meal futures on the Chicago Board of Trade on Tuesday popped to a fresh four-week high of $166.50 a ton. While prices did back off from the session high by the close, Tuesday’s market action was the most encouraging the meal bulls had seen in weeks. In late August, December meal slumped to a fresh contract low of $160.40.

Price action Tuesday did penetrate on the upside and negate one downtrend line drawn off the July highs. However, a downtrend line drawn off the June and July highs on the daily bar chart remains firmly in place. Still, the bulls on Tuesday did gain some fresh near-term upside technical momentum. If the bulls can produce some important follow-through buying strength Wednesday or Thursday, then that would be an early clue the near-term low is in place and that prices can at least begin to trend sideways, if not higher, in the coming weeks.
click on the chart to enlarge

The Moving Average Convergence Divergence (MACD) indicator overlaid on the daily chart for December soybean meal shows that a bullish line crossover signal occurred in late August, whereby the MACD line crossed above the “trigger” line of the indicator. That was the first bullish line crossover signal produced since early June. Veteran soy complex traders are keeping an extra close eye on meal prices at present. They know that history shows the meal market has been a leader in producing significant price trend changes in the soybean complex futures. Overhead resistance for December soybean meal lies at Tuesday’s high of $166.50 and then at $168.30, which is the top of a downside price gap created on the daily bar chart on Aug. 7. Above that lies more chart resistance at $170.00 a ton. On the downside, near-term chart support for December meal is located at $163.50, at $162.00 and then at the contract low of $160.40. If December meal does fall below the recent contract low, then that would produce more serious chart damage to suggest a challenge of longer-term technical support at $150.00, or below.
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