Tech Guy Weekend Comments 6/25/22
I like to zoom out on the weekend looking at the bigger picture on the charts. The November Soybean chart faked many traders, including me, on the false upside breakout.
The pattern is a corrective Elliot wave (a-b-c). 3 waves where a is down, b is up, and c is down again. This chart pattern is more specifically an irregular flat where the up b wave makes a higher high, thus appearing like a breakout to the upside. Then c sells off to below the (a) wave taking out sell stops there.
I think you will see what I mean on the November Soybean chart seen below. As mentioned on Thursday's comments, beans and corn had tremendous capitulations (trend ending events) during Thursday's trade
- The fund's buying consumed the sellers to a point that price could no longer fall.
Another feature of the Nov bean chart I'd like you to notice is that it sold off to the bottom of a 4 month trading range. All things considered, it is more likely that prices will rise next week.
Likewise, the December Corn chart marked an a-b-c correction with the c wave down completing on Thur/Fri trade. In this case, the b wave did not make a new high. Corn had even more stopping volume (enough volume to stop and reverse price) than beans did.
Also I would like you to notice on the corn chart that price stopped falling very close to the Feb 24th high near 646 price, and an uptrend line drawn from the Jan 12th low.
The a-b-c wave was a regular flat in Dec Corn - b did not make a new high. All of these chart features together tells me that price is also more likely to go up next week.
Overall this rangebound trade with wide swings up and down is caused by trader's indecision - the bulls and bears can't completely overcome one another. The result is built-up energy that becomes more tense (explosive) with every passing day.
This pent up energy will result in another trend which eventually breaks out of this 4 month range in corn and beans - more likely up than down.
If you would like some more in depth knowledge of Elliot wave theory here is a site full of information.