As we reported briefly yesterday, there was a bottom extension in the soya oil market at a daily scale, now here are some charts and a fuller report. The new signal is shown in the middle chart. The weakness of recent days should end with this extension and a rally should follow, or at least a period of sideways price movement bounded by this new extension at (or near) its lower end. There has been enough weakness to push prices down through the weekly-scale compressions that formed in mid August which we had expected to provide support (first chart). Now that they have not, it is reasonable to suppose that this market will continue to ‘churn’ for some weeks to come – one possible consequence of compressions, instead of a new trend. See our userguide on the website for a more detailed account of compressions and their interpretation. There will be trading chances within this activity and dips should be bought from now on for a long-side trade.
The monthly-scale compressions that we reported to you have also now been penetrated by this recent drop but it is far too early to say that this is significant. We are still in the first few days of this month so we cannot guess where the market will be by month-end. The idea of an upcoming bubble in all grains has been damaged by this drop but not killed.