Nobody mess with my soybean triangle before Friday

I love simple patterns on charts, like the present triangle in November soybean futures that seems to be leading right to Friday’s USDA WASDE reports.


Feel free to trade prices up or down within the narrowing confines of the pattern but don’t break it. It’s just too pretty.

(Yes, you guessed it, I – your humble scribe – expertly drew those straight lines on the chart. I am, I humbly acknowledge, multi-talented.)

Golly that’s a nice simple pattern. Lower highs, higher lows. All leading to an explosive point, which might never be reached before the narrowing pressure becomes too great.

What does it mean? I want it to be a pennant atop the flagpole of the recent soybean rally, and if it is, it suggests prices will burst upward when the lines draw close together and shoot us ever higher. That would be exciting to watch, so that’s what I’m hoping – as an observer – it will be. We’re already at record times, but not nearly by enough to produce stories to thrill the grandkids with in 40 years. So let’s get soybeans and canola to $20 and put something big into the record books.

If it’s a pennant, orthodox theory would say things are going to go up. Prices are just resting now and getting their breath back after the big increases since June. But there are other ways to look at these triangular patterns. There’s obviously pressure bringing the highs down (the action and confidence of the bears) and and taking the lows higher (the bulls keeping bullish) so when the two forces finally come into direct contact: KABLOOEY!!!!!!

But it could go either way, depending on who’s got more sticks of dynamite strapped to their chest. Things could shoot much higher – or this could be the death of the market rally that has been such a chart delight this summer. When this all comes toghether, and it looks like it wants to do it on Friday when WASDE comes out, things could go a little crazy. So stay tuned.

Of course, lots of people think chart analysis is a bunch of bunk, reveals nothing and is the preserve of flakes. If you’re one of those, focus on fundamental stuff that you have access to that no one else in the world markets is able to get. Or just go with a hunch or something.



Stories from our other publications