Soybeans Tech Update

Beans take a step back today but continue to hold above contract lows. From a chart perspective the dominant triangle pattern is pretty easy to distinguish. But with the market coiled down, the formation’s inevitable breakout looms. Let’s take a look.

July bean futures have been in their descending triangle pattern since early March. The long term downward trendline has capped four recovery efforts since then. At the same time prices can’t break to new contract lows. So, the market continues to coil, getting squeezed tighter and tighter as prices move to the point of the triangle.

Just like a tensioned spring, once released the coiled price tends to cause pretty dramatic price movement thereafter. Pent up interest that has been sidelined comes flooding back in. This can happen in either direction. Breaching the long-term downward top would grow confidence the trend has shifted, while new contract lows would spur on bearish confidence.

At some point soon soybean’s triangle formation will come to an end. With formation break objectives of 85c, which direction the triangle breaks will set a major tone technically. Stay tuned.