November soybean futures are in a steep price uptrend and just Tuesday hit a fresh six-week high. Prices have also recently pushed above major psychological resistance at $9.00 a bushel. The next upside price objective for the bean bulls is to produce a close above strong technical resistance at the contract high of $9.49 1/2. While the bulls have regained solid upside technical momentum recently, there are a couple of important warning signals that the bulls should heed.
See at the bottom of the chart for November soybeans that the slow stochastics indicator has recently moved into overbought territory, which is above 80.00. That suggests the market is due for at least a decent corrective pullback very soon.
click on the chart to enlarge
Also, the big rally in wheat futures, to all-time record highs on Tuesday, has produced strong spillover buying strength in soybeans and corn. The bull market run in wheat is now very likely in a “blow-off top” phase, in which prices make one last big push higher before topping out. When the wheat futures market does hit its peak and begins to sell off, the descent in prices is likely to be as rapid as the ascent during the blow-off run to the top. Any sharp declines in wheat futures prices will also spill over into likely strong selling pressure in soybeans and corn futures. Stay tuned!–Jim
Need help on better entry into, and exit from, markets? I have an e-book called “The Art of Effective Stop Order Placement in Trading Markets.” You can buy it for only $14.95 by clicking on the “SUBSCRIBE” section of my website at www.jimwyckoff.com . If you are like many traders who feel your market entry and protective stop placement methods need improvement, then my e-book will be a valuable resource to you. I also have an e-book entitled “62 Rules Used by Profitable Futures Traders,” which sells for $19.95. These are the best trading investments for under $20.00 you’ll ever make! All of my educational products are designed to be easily understood and are in “plain English.”