May soybean futures at the Chicago Board of Trade are still in a solid price uptrend from the autumn 2006 low. Prices have backed off recently on some profit-taking pressure, but the bulls still have the overall near-term and longer-term technical advantage. On Wednesday May soybeans did hit a fresh three-week high of $7.73 a bushel and then did back off to close nearer the session low. Now, a close above Wednesday’s high would be technically bullish to suggest a challenge of strong overhead resistance at the contract high of $8.07 1/2 in the coming weeks. Bears can correctly point out there are some downside price gaps on the daily chart for May soybeans that do need to be filled on the upside before the bulls can get too giddy.
A price move to $7.93 1/2 would fill the two downside price gaps that occurred in late February and early March. The soybean bears would gain downside technical momentum to suggest a near-term market top is in place by producing a close below strong technical support at the March low of $7.39 1/2 a bushel. Don’t be surprised to see more subdued and choppier trading action heading into the very important March 30 USDA Planting Intentions report.
click the chart to enlarge
Look for very active and volatile trading in the grain futures after that Friday morning data is released. As an aside, I will be delivering a grain market outlook speech to grain traders and brokers at the Chicago Board of Trade Thursday afternoon. Getting back to the CBOT will bring back memories of my first visit to the trading floor of the Board almost 25 years ago. I was interviewing for my first job right out of college, as a cub market reporter for what is now Dow Jones Newswires. That day I wore a tie and sweater, but no jacket–not realizing the CBOT rules required all persons on the trading floor to wear a jacket. The fact of the matter is, I was young, already married with two children and could not afford to buy a suit! I remember my future boss taking me onto the trading floor anyway, but scurrying around, dodging the floor security guards. I did get that job as a cub market reporter on the trading floors of the CBOT and Chicago Mercantile Exchange, and soon thereafter became enamored by the markets, traders and technical analysis. I still am.
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