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Watch the Mini-Channel and Seasonals in Soybeans

The start of October is when soybean futures (ZS) seasonally rise, flatten out in November and then continue to rally through the end of December. This all follows a bearish period between June and the start of October.

So far soybeans have been tracking this seasonal tendency. There has been an uptick in soybeans off the 912.25 October low, but seasonals aren't enough to base a trade of off.

The price is moving higher within a channel since the start of October. For those who are bullish and believe in the seasonal tendency, buying  near the low of the channel between 940 and 930 presents longer-term upside potential heading into the end of month and especially the end of the year. Seasonally the rebound isn't usually as strong as the decline, so the target is between 1120 and 1160.

Figure 1. January Soybean Futures ($ZS_F) Daily Chart


Strip out the seasonal tendency and look at this in a purely technical light and the chart looks like a bearish flag (channel) setup. A drop below the channel at 929 (could also use recent low at 923) creates a bearish pattern with a target at 865 to 855. This target is based on a Fibonacci extension of the accelerated decline starting in September, as well as the width of the channel subtracted from the breakout price. 

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