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Soybean Trade Technical Analysis - Soybean Trade Trading: 2018-05-11
Higher Chinese crop forecast bearish for soybeans prices
Lower Chinese imports forecast while the crop is expected to increase is bearish for soybeans. Will soybean prices continue the decline?
China’s Agriculture Ministry forecast country’s soybean imports will fall for the first time in 15 years in 2018-19. The decline was estimated at 0.3% with imports amounting to 95.65 million tons. Higher prices as Beijing threatened to levy 25% retaliatory tariff on US soybeans after President Donald Trump ordered to prepare tariffs on imports from China were cited as a reason for lower demand. Meanwhile China's own soybean production is forecast to grow, with 2018-19 output estimated to rise 4.9% percent to 15.27 million tons. Lower export demand and higher supply forecast is bearish for soybeans.
On the daily timeframe the SOYB: D1 has been trading sideways after hitting sixteen-month high in the beginning of March. It is testing the support line currently.
- The Donchian channel is neutral: it is flat.
- The Parabolic indicator has formed a sell signal.
- The MACD indicator is below the signal line and the gap is widening, which is bearish.
- The stochastic oscillator is rising from the oversold zone, this is a bullish signal.
We believe the bearish momentum will continue after the price closes below the support line and lower boundary of Donchian channel at 1011. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above last fractal high at 1065.8. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (1065.8) without reaching the order (1011), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.
Technical Analysis Summary
| Position | Sell |
| Sell stop | Below 1011 |
| Stop loss | Above 1065.8 |
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