CBOT soybeans poised to rise towards $10.21-1/2 per bushel in Q4

• The resistance is identified as the 161.8pc projection level of a downtrend from $16.30, based on the fall from the September 2012, high of $17.94-3/4 to the April 2013, low of $13.54-1/2.
• The trend could be broken down into five waves.

SINGAPORE: The CBOT soybean first-month contract is poised to break a resistance at $9.17-1/2 per bushel and rise towards $10.21-1/2 in the next quarter.

The resistance is identified as the 161.8pc projection level of a downtrend from $16.30, based on the fall from the September 2012, high of $17.94-3/4 to the April 2013, low of $13.54-1/2.

Following its two failures to break the resistance in February and June, the contract approached this barrier again.

The shallow correction from the June high of $9.21-1/2 may have prepared the contract with enough bullish momentum to clear the resistance.

The long-shadowed hammer forming in May is followed by a small white candlestick.

Such a pattern strongly suggests a reversal of the downtrend from $17.94-3/4.

The trend could be broken down into five waves.

This five-wave structure further indicates a trend reversal.

The bullish divergence on MACD also supplements the bullish signals.

Even if the downtrend has not reversed, the current bounce may at least consist of three waves.

The third wave labelled c is capable of travelling to $9.78-1/4, its 100pc projection level.

Support is at $8.53-1/2, a break below which could cause a fall into the range of $7.49-1/2 to $8.09-1/4.

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Wang Tao is a Reuters market analyst for commodities and energy technicals.

The views expressed are his own.

No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.