Posted on 10/27/2021 1:05:25 PM by Dave Toth
While canola maintains its secular bull trend, today’s bean oil relapse below Fri’s 61.94 initial counter-trend low detailed in the hourly chart below confirms a bearish divergence in short-term momentum that defines last week’s 64.90 Globex day-session high as one of developing importance and a mini risk parameter from which non-bullish decisions can be objectively based and managed. The fact that this admittedly minor mo failure stems from the upper-quarter of the four-month range contributes to a count that questions the risk/reward merits of sustaining a bullish policy “up here”.
The daily log scale chart above shows the market’s rejection of the upper-quarter of the four-month range thus far. Admittedly, a failure below 12-Oct’s 58.52 corrective low remains required to break the uptrend from 21-Sep’s 54.18 low. But being back in the middle of the four month range, this technical level is impractical, so traders are advised to acknowledge and accept whipsaw risk back above 64.90 for deeper nominal risk below 58.52 and move to at least a neutral/sideline position to circumvent the depths unknown of another intra-range relapse.
From a much longer-term perspective and until negated by a break below 21-Sep’s pivotal 54.18 low and long-term risk parameter, the past four months’ mere lateral chop is still considered a corrective/consolidative event that warns of an eventual resumption of the secular bull trend that preceded it. What the market has in store between 64.90 and 54.18 is anyone’s guess at this point, so a neutral-to-cautiously-bearish stance is advised until negated by a recovery above 64.90 that can re-expose the major bull and an eventual bust-out above 08-Jun’s key 67.06 high. In effect, traders are advised to toggle directional biases and exposure around 64.90.
