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Supporting Soybeans

03/16/11 08:21:00 AM
by Austin Passamonte

Here's a midterm price outlook for soybean futures markets.

Security:   ZS
Position:   N/A

Grain markets have risen dramatically through this past year, in part due to supply/demand and in part due to US dollar valuations. Fed-directed quantitative easing (QE) programs rose all ships on that proverbial tide. With the recent global cross-currents of geopolitical and natural disasters affecting world markets, let's see what price action itself has to say about soybean prices forward.

Graphic provided by: NinjaTrader.
A daily-chart view (Figure 1) shows three ascending trendlines in fanned-out fashion. The steepest one (dashed line) measured the latest QE ramp, which was broken to the downside in mid-February 2011. That was first warning for sideways to lower price action ahead.

The second trendline (solid thin line) measures one swing low that bounced up to a lower-high failure near 1420s and promptly dropped back through to new swing lows near the 1300 level. That has since acted as resistance for subsequent swings back up to the 1420 area again, creating a double-top highs failure pattern.

Proverbial last line in the sand is the lowest trendline (solid, bold), which held the late-February swing lows and now holds the most recent lower-high lows. A resumption of the overall uptrend should happen right from there. If that third line breaks on a weekly closing basis, overcooked beans probably head back down to the 1200 or 1100 zones for further basing near there. A close back above the 1420 double top needs to happen before that pattern is negated and buy-stops on open shorts fuel the fire for further ascent.

Spring planting season for grains is upon us now. Recent volatility due to world events will give way to crop reports on acreage and weather related conditions as seed goes into the ground. Let's keep an eye on this fantail pattern of price reaction for the longer-term trend forecast to come.

Austin Passamonte

Austin is a private trader who trades emini stock index futures intraday. He currently trades various futures markets from home in addition to managing a trader's educational forum

Title: Individual Trader
Address: PO Box 633
Naples, NY 14512
E-mail address:

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