Joining a global commodities rout, Soybean Oil had a rough time in the past 2 weeks, tumbling close to 22%. The move precipitated after breaking the 6-month uptrend and has struggled to find support until now.
After bouncing off the $65 support level and the 61.8% Fibonacci retracement, prices seem to have found a floor, ready to make the next leg upwards.
Zooming out to the daily candles, we see Relative Strength Index (RSI) deeply oversold, with only 2 other occasions since 2015 where the RSI reached such levels. One was in 2015 and the other one in 2020.The 2015 instance was followed a 50% price increase from the low of the RSI and the 2020 one was followed by a massive 196% price increase.
The sharp selloff, strong support levels, and historical precedence allow us to favor the long side for Soybean Oil.
Entry at 66.87, stops at 58.3. Target at 78.9.
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
After bouncing off the $65 support level and the 61.8% Fibonacci retracement, prices seem to have found a floor, ready to make the next leg upwards.
Zooming out to the daily candles, we see Relative Strength Index (RSI) deeply oversold, with only 2 other occasions since 2015 where the RSI reached such levels. One was in 2015 and the other one in 2020.The 2015 instance was followed a 50% price increase from the low of the RSI and the 2020 one was followed by a massive 196% price increase.
The sharp selloff, strong support levels, and historical precedence allow us to favor the long side for Soybean Oil.
Entry at 66.87, stops at 58.3. Target at 78.9.
Disclaimer:
The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios.
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