Soybeans Could Be Trying To Base...

From a peak in July, Soybeans have fallen significantly, retracing 50% in absolute terms. There are other technical factors that could quickly combine to offer the conclusion that a modest base had formed, heralding a temporary reversal.

• WEEKLY CHART – CONTINUATION: After losing 50% of its value, the Weekly continuation chart has also neared the 76.4% level of the major 2006-2008 rise. This, together with the significant 757.50 Jun-05 low, provides a potentially strong underpinning of the market (but there is no requirement that this area be tested before any rebound phase).
• DAILY CHART – JAN-09: See how the 2.618 swing off prior 1186.50-1388.25 rally, around 860, has provided effective s/term support. Falling resistance just below 900 is the first hurdle for the bulls, but a break/close through the 981.75 04-Nov high is needed to show that a base had completed. Our initial target would be 38.2% of the fall so far, around 1146. A close below the recent 835.25 low would essentially negate this s/term basing scenario. Note that a similar set up exists in Wheat.
• Last week’s Update looked at the basing prospects for Coffee – these still remain. Coffee is another market where a 2.618 swing projection has proved an effective support area.

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