Soybean oil futures (ZLK26) present a selling opportunity amid further price weakness.
See on the daily bar chart of May soybean oil futures that prices have pulled back quite a bit from this week’s contract high, including producing a technically bearish buying “exhaustion tail,” whereby bulls ran out of gas at higher price levels. That is a clue that a ceiling has been reached in the market. I am also in favor of spreads soon starting to clear out long soybean oil and short soybean meal (ZMK26) spreads.
Crucially, the gigantic drop in crude oil (CBK26) (CLJ26) prices earlier this week is also bearish for bean oil. Crude oil prices have likely reached a major high, which would most likely mean the same for bean oil.
A move in May bean oil prices below chart support at the overnight low of 64.38 cents would give the bears more confidence and also become a selling opportunity. The downside price target would be 57.00 cents or less. Technical resistance, for which to place a protective buy stop just above, is located at 67.50 cents.
IMPORTANT NOTE: I am not a futures broker and I do not manage any trading accounts other than my personal account. My goal is to point you to potential business opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you can initiate. Any trade I analyze is hypothetical in nature.
Here’s what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%):
Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before investing money in futures or options contracts, you should consider your financial experience, goals, and financial resources, and know how much you can afford to lose beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations when entering into those contracts. You should understand your risk exposure and other aspects of trading by carefully reviewing the risk disclosure documents your broker is required to provide you.
As of the date of publication, Jim Wyckoff had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com