July soybean futures at the Chicago Board of Trade on Wednesday gapped lower on the daily bar chart and hit a fresh three-month low of $7.29 a bushel. Near-term chart damage has been inflicted upon the soybean market recently, and prices are in a two-month-old downtrend from the late-February contract high of $8.22. However, July soybeans are presently overdone on the downside and due for at least a corrective bounce soon.
The 14-period Relative Strength Index (RSI) is presently reading 29.90. Any RSI reading below 30.00 does suggest a market is short-term technically oversold and due for at least a corrective bounce very soon.
click on the chart to enlarge
The RSI reading in July soybeans is the lowest since September of last year, when the contract low was established. There is also a very strong technical support zone located just below present price levels. That support zone is located between $7.04 1/2 (the bottom of a big upside price gap on the daily bar chart) and $7.22 (the November and December 2006 highs). Technical odds do suggest that support zone will hold on any attempt to penetrate it on the downside. For the soybean bulls to generate some significant upside near-term technical momentum, they must push July futures above a stiff resistance zone located between $7.50 and $7.56 a bushel.
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