Looking at the daily charts this morning I noticed a potentially interesting formation…November beans posted their harvest lows, apparently, 11 trading days ago when we bounced off of the 884 level..
We then saw almost a 130 cent move to the recent highs, posted last Wednesday, when we approached the 1010 level…Currently if you look at the chart, the pennant formation, which looks like a right triangle if you draw the upper and lower resistance points, hence the name… Currently we are approaching the apex and a clear direction may emerge if we break above or below the trend lines bordering the pennant…
This looks like a bull pennant, so my feeling is that if we pop above the 1013 level, we most likely will see a push up to the August Highs around 1050-1060.
As with all technical analysis, hindsight is 20/20, and nothing is full proof.
However I have found that the most simple of formations usually have the highest percentage of predictability from those formations…The number one problem with relying on technical analysis is getting to enamored with what “should” happen from a formation…
A formation should help get you into the market with an opinion, but if that opinion proves to be a head-fake, you must exercise discipline, cover losses, and look for another higher percentage play from the charts. For now, however, I think this looks like a bullish pennant in Nov Beans.
That is all…
Good Trading