Everyone in the grain markets is waiting to overreact to whatever USDA says tomorrow in its crucial WASDE report.
That’ll be USDA’s kick at the yield-guessing can and everyone wants to use it for either the excuse to bail on the rally, or drive it another leg higher.
This is odd in some ways, because everyone’s also getting ready to disagree with all the numbers, mock them, ridicule them and say they’re outdated. Such is the way with all these reports. We dismiss the numbers, but then use them as the basis for the next little while in the markets.
As everyone always says, “they’re the numbers we have.” Or “got.” Depending on how casual one wants to sound.
As anyone who follows this benighted blog knows, I’ve been hoping that the consolidation triangle that’s formed atop the recent soybean futures rally holds until Friday, because that could set up a truly stupendous breakout. Or breakdown. I’m hoping this because I am a journalist who covers ag markets and I want something interesting to watch. You as a farmer have more at stake, so perhaps you feel differently and are less glib about the situation. This rally so far isn’t good enough to tell my future grandkids about in 40 years, so I need it to be better.
But what we’ve been looking at for a while now seems very much to me like a pennant formation and a continuation pattern, and it didn’t break this week. Yesterday I thought it had fallen apart and that my pretty chart was broken. November soybean futures prices broke below the line of support that the higher lows had been creating, and I thought it was all over. But after testing the lower level, prices went right back into the pennant range, so I am using confirmation bias to continue to believe my beautiful – if rather too sharp – pennant is still in place. I just want it to be.
I shouldn’t really believe in old-time classic theory formations like flags, pennants, head-and-shoulders, etc. because I’m far more keen on Elliott wave analysis. But the classic stuff is simple and clean, so it’s less exhausting to employ.
Anyhow, here’s the chart again. Still keeping itself together.
What’s going to happen tomorrow? My chart tells me things are likely soon going up. What does your chart tell you?