Soybean futures (symbol: S) have spent the better part of the last decade in rally mode, trading near the $4/bushel level in 2001 to nearly $18/bushel in 2012. Since the Sep12 high of $17.9475, beans have been in consolidation mode, testing the long running uptrend line which originates from the Sep06 level. While the uptrend line was violated, beans have rallied in good form from the $12.55/bushel level.
The rally since Nov13 from the $12.55 low has occurred with moderating volatility and strong, but moderating volumes. Stochastics are approaching overbought territory again. We believe beans continue in consolidation mode with resistance at the $16.63 level and support at the $12.55 and $10.64 levels. Breakout from those ranges will be necessary to re-establish trend.
It is important to point out that successful consolidation at the higher end of a decade long rally, if that is what is unfolding, is an extremely powerful indicator of things to come.
Murphy & Co’s Soybean model is currently long. To learn more about Murphy & Co’s position models, visit http://murphycofutures.com/position-models/.