FREE Guide - 5 Chart Patterns You Need to Know!

Soybean Meal Consolidates Before Next Big Move

From a high of 411.4 (December contract) in May, soybean meal futures have traded all the way down to a low of 340 this month, currently trading just above that low.

The near vertical drop at the start of July has been followed by a consolidation, albeit an active one, between 366.6 and 340.

soybean meal-1.jpg
Figure 1. Soybean Meal Futures (ZM, December Contract) Daily Chart

The breakout of this consolidation could lead to another big move. Momentum is decidedly down, and a lower May high relative to the 2012 high even puts the long-term picture favoring a break lower. Ultimately though, a break above or below the consolidation can be traded.

The break lower is easier to define as 340 has been tested on multiple attempts. If 340 breaks the target is 300, with a more conservative target or profit taking area at 325. 2011 lows are near 275 which may also act as a magnet.

A break above the consolidation must be considered a pullback in an overall downtrend at this point. Expect selling pressure to commence again in the 376 to 385 region. Since the break-out higher fights the overall downtrend trend it should traded with more caution, and kept on a tight leash given the recent propensity for larger to moves to downside.

Get This FREE Technical Analysis Guide!
Timing is everything, and with this guide, you'll learn how technical analysis can help find the right time to enter and exit your futures trades. Nearly 30 explanations and examples of the most popular technical analysis tools are all in this one handy guide. It's like having a futures trading mentor at your side!