The Paragon Futures Report
By Brian D. Green
Brian D. Green is Chief Market Strategist of Paragon Futures Group, Inc. and Navis Capital Management, Inc., an introducing broker and Commodity Trading Advisor based in Powell, OH. Paragon Futures Group, Inc. specializes in financial futures while Navis Capital Management, Inc. produces The Paragon Reports, a daily advisory service for S&P, Nasdaq and T-Bonds traders, and manages customer accounts. The firms' clientele includes institutions, hedge funds, floor traders and individuals located throughout the world.
In our soybeans analysis in July, subsequent to the rally to 538 we stated that aggressive traders should scale into a long position on a retreat below 486 with the objectives at 500 and 515. The market played into this trading plan perfectly, setting lows at 484-486 before reversing higher to the first objective one day later and exceeding the second objective of 515 by 1 points two days later. So what can traders expect now.
Since the 484-485 lows, the November Soybeans (SX1) have been consolidating. A review of the chart action since July 10 shows the market working off the excess volatility of the June 25 to July 17 rally. The post-July 10 intraday extremes are defined by intraday moves between 484 and 538 with buyers controlling the action below 498 with sellers above 524. The past two days produced tests below this range with closes back inside the range. The extreme closes in this range are at 485 and 524. A smaller range of 495-516 is also apparent during the July 25 to August 02 action. The key levels within this zone are at 495-501, controlled by buyers and 511-516 for the sellers. The extreme closes in the smaller, six-day range are at 504-1/2 and 516.
With the grain markets, especially soybeans, dominated by weather factors in August, traders should monitor the 495 and 516 levels for keys to longer-term action. The August 03 breakdown was a fakeout, testing almost to the 474 target of the breakout below 495 before reversing higher. A close back above 495 will be at least a short-term positive though a close back above 504 is necessary to turn the momentum back in favor of the bulls. At a minimum, a closing break of 516 will produce a 20-25 points move with the fundamentals and technicals favoring a continuation higher to test the July high at 538.
The stage is setting up for the next swing move. Traders that understand the risk and are willing to withstand the price swings may profit well in the coming weeks if the hot, dry weather in the mid-section of the US continues. Please visit or website or give us a call about trading this setup or any of our other advisory or brokerage services.