Soybean short swing trade:
The Bollinger Bands width has narrowed to 2.56% of price which is a level not seen in over a year. A new 6-month or greater low in bandwidth indicates that a volatility squeeze breakout is likely upon us. Similar volatility squeeze situations exist in wheat and corn but they both broke to the downside significantly last week. Wheat was -6.42% on the week, corn -4.21%, and soybeans lagged at -0.20%.
Soybean price reached the lower parabolic SAR which is a signal to short the volatility squeeze. The stop loss is positioned at the upper SAR for this trade. A stop above the 20-day SMA would be more conservative.
The overarching price pattern is a rising wedge with what appears to be a fake breakdown in late January. If we hold below the 20-day SMA it will roll over in 3 days.
Wheat shows a similar setup already occurred a couple weeks ago but it was a head fake to the upside. There is risk in wheat being at the recent low pivot for the 3rd time. It could moon from here like gold did after making a triple bottom. Note the gigantic head and shoulders.
Wheat:
Gold:
Note the lack of a Bollinger Band squeeze at the pre-moon triple bottom:
Corn also shows a similar setup, but there was no head fake, it just broke down out of the band squeeze.
Corn:
Soybean Crush spread:
It appears positioned for a big move in either direction. Seems likely to bounce back up in concert with a soybean drop. It’s in volatility squeeze territory as well.
Oil:
The mother of all commodities has an inverse head and shoulders continuation pattern suggesting more downside:
tldr; short soybeans
The Bollinger Bands width has narrowed to 2.56% of price which is a level not seen in over a year. A new 6-month or greater low in bandwidth indicates that a volatility squeeze breakout is likely upon us. Similar volatility squeeze situations exist in wheat and corn but they both broke to the downside significantly last week. Wheat was -6.42% on the week, corn -4.21%, and soybeans lagged at -0.20%.
Soybean price reached the lower parabolic SAR which is a signal to short the volatility squeeze. The stop loss is positioned at the upper SAR for this trade. A stop above the 20-day SMA would be more conservative.
The overarching price pattern is a rising wedge with what appears to be a fake breakdown in late January. If we hold below the 20-day SMA it will roll over in 3 days.
Wheat shows a similar setup already occurred a couple weeks ago but it was a head fake to the upside. There is risk in wheat being at the recent low pivot for the 3rd time. It could moon from here like gold did after making a triple bottom. Note the gigantic head and shoulders.
Wheat:
Gold:
Note the lack of a Bollinger Band squeeze at the pre-moon triple bottom:
Corn also shows a similar setup, but there was no head fake, it just broke down out of the band squeeze.
Corn:
Soybean Crush spread:
It appears positioned for a big move in either direction. Seems likely to bounce back up in concert with a soybean drop. It’s in volatility squeeze territory as well.
Oil:
The mother of all commodities has an inverse head and shoulders continuation pattern suggesting more downside:
tldr; short soybeans
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.