All the ag markets today seem to be vexing us with the question of: Are prices going to bounce or break?
Are they going to bounce off of support levels, where they’re floating uneasily around right now, or break through and start a leg down?
It doesn’t seem to matter what chart you look at, everything’s tickling support levels. Here’s canola:
It’s a bit below that previous bounce-point of $380 back around harvest, but seems like it’s bouncing off a possible support level there. (With only a single low to go from, it’s hard to say if it’s a support level.) It certainly hasn’t broken convincingly through that previous low. How about soybeans?
That’s back in a support zone after the recent selloff, and if anything, and if it holds at this point now, there’s still something of a upward sloping trend line off the lows from March. Let’s look at wheat – both Chicago winter and Minneapolis hard red spring:
Both of those have September /October lows they haven’t broken. The same applies in Chicago lean hogs.
The chart shows this contract floating right around a previous low zone in a generally rising market.
What does all this mean? Whatever I say here today will be broken by tomorrow, but I think right now it’s not at all clear whether the markets have turned down or are just correcting. But all falling to near term lows and not exceeding them suggests the market itself doesn’t know, and is trying to decide whether to break through and fall – and once resistance levels are broken the fall is often fast and hard – or bounce back up as off a hard concrete floor.
If you want to get a sense of medium term market direction, watch these markets for the next few days, methinks.