I looked up why the prices actually rose over the week and found the following causes: earlier in the week, due to “technical and commercial buying” (1) and due to a lower dollar which in turn was because of the “easing concerns about the fiscal cliff” (1), there was the net effect of lowering soybeans prices. At the same time, traders are watching the South American for news of delayed plantation given the heavy rainfall it received this season. It turns out that fewer soybeans have been planted at this time as compared to last year, which may have also driven prices up. Later in the week, soy oil exports rose which helped to keep soybean futures prices afloat (2).
Although technical analysis seemingly worked for me, I think it’s a bit of an odd way to go about making big trading decisions. One often hears technical traders say that theory should not be mingled with analysis of price charts, so that is what I did: I refrained from reading into the demand and supply forces at play and focussed just on ups and downs in prices (which certainly made my life a lot easier this week). For future trading decisions though, my choice of doing technical analysis vs. reading into the theory of demand and supply would simply be a result of whether I am plugged into the market or not. It is assuring to know that even if one is oblivious to what is going on in the market, they can likely make a technical trade as good as any other “expert” who has been completely plugged in at the time.
- http://www.farms.com/news/corn-soybeans-prices-rise-on-market-strength-57185.aspx
- http://www.thecropsite.com/marketreports/bruglerreports.php