Bears Retaining Technical Advantage in Soybeans

May soybean futures at the Chicago Board of Trade late last week dropped to a fresh two-month low of $8.54 1/4 a bushel. Price action this week has seen some tepid short covering in a bear market, but the bears continue to hold the near-term technical advantage. May beans continue to trade below a six-week-old downtrend line drawn from the January and February highs. It would take a move in prices back above major psychological resistance at $10.00 a bushel to push above and negate the downtrend line on the daily chart. Two popular moving averages overlaid on the daily chart for May soybeans (9-day and 18-day) are also in a bearish posture at present, as the 9-day is below the 18-day moving average. Both moving average lines are also trending solidly lower, which is another bearish technical clue.

click on the chart to enlargeSoybeans May 2009The next downside price objective for the soybean bears is to push and close May futures prices below strong technical support at the contract low of $7.86 1/2, scored in early December. Above that key level lies key chart support at last week’s low of $8.54 1/4. Psychological support is also located at $8.00 a bushel. For the soybean bulls to begin to gain some fresh upside near-term technical momentum they will have to push and close May futures prices above solid technical resistance at $9.40 a bushel. Below that level is located psychological resistance at $9.00 and then technical resistance at $9.15 and $9.25.–Stay tuned! Jim Wyckoff

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