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Technical Analysis #C-SOYB : 2016-10-18

China to purchase 5.1mln tonnes of US soy

China is to acquire 5.1mln tonnes of US soy for $2.1bn, according to U.S. Soybean Export Council. The agreement was signed on Friday. Will soy prices advance?

USDA expects China to import 86mln tonnes of soy in 2016/17 agricultural season. Delivery from US will amount to around 30mln tonnes. Late in August China acquired 4mln tonnes of US soy which pushed prices up. Soy refining in US rose by 2.1% to 129.4mln bushels in September 2016 compared to previous September, according to National Oilseed Processors Association. By the end of this September stockpiles in soybean oil have contracted to 1.376bn pounds from 1.62bn pounds in August. This may reflect high demand. Increasing oil prices limit forecasts of its high yields in Brazil. It may reach 103.48mln tonnes compared to 97.15mln tonnes last year, according to Safras & Mercado. USDA expects the soybean crops in Brazil to amount to 102mln tonnes.


On the daily chart Soyb: D1 has been increasing for 3 straight days having approached the upper boundary of sideways channel. The price has surpassed the level of 200-day moving average. Further growth is possible in case high demand for soy persists.

Parabolic is giving bullish signals.
Bollinger bands have widened which means low volatility. They are slightly tilted upwards.
RSI is above 50, no divergence.
MACD is giving bullish signals.

The bullish momentum may develop in case the soy surpasses the upper Parabolic signal and Bollinger band, support of the rising trend and two last fractal lows at 985. This level may serve the point of entry. The initial stop-loss may be placed below the lower Bollinger band, Parabolic signal and the last fractal low at 940. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 940 without reaching the order at 985, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Summary of technical analysis

Position Buy
Sell stop above 985
Stop loss below 940

Tuesday, 18 Oct, 2016 / 1:57

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