10wheatM

Technical Update - Can Soft Commodities keep soaring?

Commodities 4 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Soybeans seems to be forming a possible corrective symmetrical Triangle pattern. However, there is divergence on RSI (RSI value is falling where price of instrument is rising) indicating breakout to be to the downside. Rising trend line since December2021 offers some support.
If breaking out bearish and below trend lines strong support is at $1,550 i.e. low of the Triangle and 0.382 retracement.
If a bullish break out a move to around $1,850-1950 is not unlikely.

 

Soybeans D 31 mar
Source: Saxo Group

Wheat went almost parabolic in the first weeks of the war in Ukraine with the Exchange limiting trading on a daily basis. Prices have stabilized somewhat but volatility is likely to remain elevated.

After market opened trading freely we saw a correction down to the 0.50 Fibo retracement at around $1,050. Before next corrective wave down to the 0.618 retracement at around 978.
However, with no divergence on RSI  (divergence is when RSI value is falling where price of instrument is rising) Wheat could very well reverse its current short term (corrective?) downtrend

Wheat D 31 mar
Source: Saxo Group

Corn seems to be forming a sideways correction, possibly a Descending triangle pattern. KEDy support at $725. Minor RSI divergence indicating support could be taken out. Another bearish attempt could push Corn prices down to strong support at around 678.
However, if the support holds and prices start moving towards the upper falling trend line RSI is likely to break above its falling trend line indicating a bullish break out.

Corn D 31 mar
Source: Saxo Group

Coffee is trading in a steep falling channel It seems to be a corrective move following two years uptrend. RSI is showing bearish sentiment with no divergence indicating we could see another attempt at the 210 support and the 200 SMA. If breaking bullish out of the falling channel there will be some overhead resistance with both the 55 and the 100 SMA coming down roughly around 230

Coffee D 31 mar
Source: Saxo Group

Robust Coffee has found support at the 200 daily SMA testing the upper falling trend line in its down channel.
There is no divergence on RSI. However, break out of the lines drawn on RSI could be a good indicator of the price break out. Will Cotton break above the falling trend line or have another attempt at the 2,000 support

Robusta D 31mar
Source: Saxo Group

White Sugar seems to be forming a rising Wedge like pattern inside a wide rising channel. With no divergence on RSI we are likely to see Sugar bouncing off short term rising trend line. However, if lower trendline is broken trend is not reversed unless Sugar price breaks below $518. If that scenario plays out a test of the medium term rising trend line and the 200 SMA are likely to be tested.

 

Sugar D 31mar
Source: Saxo Group

Cotton price is extending its now two years uptrend approaching 200% (2.00 Fibo) projection of the latest correction. It could be a short term exhaustive move followed by another correction. However, staying above the rising trend line trend would still be up.
Minor divergence on RSI is not yet confirmed.

Cotton D 31 mar
Source: Saxo Group

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