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Soybean market at critical juncture

11/05/2013 @ 7:19am

November CBOT soybeans edged to a slightly lower close on Monday. Soybean prices came under pressure amid speculation the U.S. government will bump up its soybean crop production estimate in a report due Friday. Private forecasters have put output numbers at higher levels than the government. Informa estimated soybean production at 3.298 billion bushels, up from the government's projection of 3.149 billion bushels. FCStone said output would total 3.27 billion bushels.

Technically, the November soybean contract is at a critical juncture. The bears have pressed the market lower in recent days down to an important chart support zone at the $12.63-$12.61 area. The market tested that zone on Monday, but did not close below it. For now that floor represents support carved out from daily swing lows on Oct. 1, Oct. 14 and again on Nov. 4.

The bears are chomping at the bit to break that support floor, and action will be critical to monitor near term. If a strong and decisive breakout below $12.61 is seen this week, it would confirm a bearish downside breakout and likely unleash a strong fresh selling wave. The market has been largely consolidating for the past month, and a selloff under that floor would represent a new trend move.

A 61.8% Fibonacci retracement of the August rally comes in around $12.56. But given the current position of the market, that level may not offer much support. Below there, a minor target lies at $12.40 and then $12.13.

Near-term resistance lies at $13.00. The bulls would need to reclaim that ceiling to turn the near-term outlook back to the upside.

  • $14.09 3/4 -- the contract high
  • $12.87  -- the 10-day moving average
  • $12.85 1/4   -- the 20-day moving average
  • $13.04 1/4  -- the 40-day moving average
  • $ 9.22 1/2 -- the contract low

Write to Kira Brecht at copydesk@dowjones.com
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(END) Dow Jones Newswires
November 05, 2013 08:00 ET (13:00 GMT)
DJ Soybean Market at Critical Juncture -- Technical Analysis->copyright

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