May soybean oil (ZLK26) futures present a selling opportunity on more price weakness.
See on the daily bar chart for May soybean oil futures that prices have backed well down from this week’s contract high, including producing a technically bearish buying “exhaustion tail,” whereby the bulls ran out of gas at higher price levels. That’s a clue that a market top is in place. It’s also my bias that spreaders will soon begin unwinding long soybean oil, short soybean meal (ZMK26) spreads.
Fundamentally, the mammoth drop in crude oil (CBK26) (CLJ26) prices early this week is also bearish for bean oil. It’s likely that crude oil prices have put in a major top, which would very likely mean the same for bean oil.
A move in May bean oil prices below chart support at the overnight low of 64.38 cents would give the bears more confidence and it would also become a selling opportunity. The downside price objective would be 57.00 cents, or below. Technical resistance, for which to place a protective buy stop just above, is located at 67.50 cents.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%):
Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
