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    Technical Analysis #C-SOYB : 2016-01-29

    Soybean on the rise

    World soybean production forecast has been lowered recently. Dry weather forecast in South America has spurred concerns for soybean crop yield in the region. Will the price of soybean continue rising?

    Soybean prices are rising supported by dry weather and global output estimates. Commodity Weather Group forecasts continued dry weather in crop areas in Argentina, which will negatively impact the crop yields. The United States Department of Agriculture updated its estimate of the Global Soybean Production in 2015-2016 to 319.01 million metric tons, about 1.1 million tons lower than the previous month's estimate. At the same time China’s soybean imports are estimated to edge up to 79 million tons, slightly higher than the previous year. Lower domestic production and growing demand for protein meal and vegetable oil are forecast to contribute to higher Chinese imports. Weather and import demand outlook support the bullish bias in soybean prices.

    SOYBEAN

    On the daily timeframe SOYB: D1 has been trading with a negative bias in the past six months. But the price is rising since the start of the new year. The parabolic indicator has formed a buy signal. The Bollinger bands have narrowed slightly, indicating lower volatility. The MACD indicator is above the signal line and the zero level which is a bullish signal. The RSI indicator is above 50 level but is edging lower, which is a bearish sign. We believe the bullish momentum will continue after the price closes above the fractal high at 885.5. A pending order to buy can be placed above that level. The stop loss can be placed below the last fractal low at 870.5. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop loss level at 870.5 without reaching the order, we recommend cancelling the position: the market has undergone internal changes which that were not taken into account.

     

    Position Buy
    Buy stop above 885.5
    Stop loss below 870.5

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