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Soybeans Technical Analysis / Strategy
We have been waiting for such opportunities to rise as the summer is coming to an end. We have been observing Soybeans for quite some time, waiting for our technical models to signal us it is time to execute long trades in the commodities market.
Based on our technical models, moderate gains are expected in Soybeans within the next several months, possibly even as soon as this week although we cannot predetermine when the gains would occur at this stage. Both the daily and the weekly chart affirmed positive divergence in the technical indicators, suggesting the gains are due in just a matter of time. In the monthly chart we highlight the top Head-And-Shoulders (H&S) that initiated the heavy selling. The 200 moving average (MA, in orange) is they key level. We would expect the price to close above the 200MA by the end of the month, in which further gains are then expected.
Soybeans Monthly Chart, NOV14 Contract
Please click on the chart to enlarge:
If we our analysis is correct, executing a long trade in Soybeans is likely to be classified the trade of the year. Soybeans are often planted in September, which means weather conditions will play a key role in the fundamental success of our long trade. Recent losses in Soybeans, Corn and Wheat were due to the United Stated Department of Agriculture (USDA) report as estimate for bushels per acre. Gains in Soybeans are likely to occur due to changing weather conditions that will affect the fresh Soybeans plants.
Although this is dipping into grey areas, it is interesting that not long a go a commodity crisis was declared due to the rising prices of grain commodities. Those fears were ‘swiftly’ eliminated as you may see from current levels of Soybeans, Corn and Wheat. We are also observing Feeder Cattle contracts for a short entry as reversed correlation is likely. We are currently holding a long trade in Platinum (XPT/USD).
Soybeans Trade Details
Long @ market price
Take profit: 1,170
Protective stop: 949
Estimated duration: 90 days
Risk Ratio (RR): Above 1 : 7
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18/09/14 UPDATE: Soybeans is trading at 981.50 at the time of this writing. We are within a close proximity to our entry. The price was able to reach 998 but lacked the ability to sustain the gains.
25/09/14 UPDATE: Soybeans was unable to sustain the gains as heavy selling was noted. We were stopped out of the long trade and continue to observe the grain commodities for future entries.
Trade alerts are also issued in the weekly update.