Large Green Lentils

Today, we will look at the weekly Large Green Lentils at Saskatchewan Plant price charts dating back to 1992.

****Click on the image to enlarge****

The historical volatility of this chart makes this a difficult chart to read; however, once I begin drawing trendlines, I can see the opportunities.

As the above chart demonstrates, once support was found at the green trendline with the September 9, 2020 retest at 27.14, it was off to the races.

The price action around this trendline is an excellent example of “What was once resistance often acts as support”.

This pattern of a break above resistance followed by a retest before resuming the direction of the trend is commonly found in charts.

We see similar price action between current levels and the yellow trendline dating back to 1992.

Does this mean that prices will continue higher?

Let’s look at a lower timeframe to see if we find some clues.

The chart below shows the price action of the past five years in greater detail.

****Click on the images to enlarge****

As a market technician, I rely on Fibonacci retracement and expansion tools to identify levels of interest where the price often slows down or reverses. I have no idea why this happens; however, I assure you that it does.

The above chart identifies my key Fibonacci levels of interest that often act as support or resistance.

I calculated Fibonacci retracement levels using the 2016 high of 76.06 and the 2019 low of 17.86 as the start and end points, finding that the current price of 62 is just below my 0.786 Fibonacci retracement level of 63.

The price is currently at an interesting level, as it is sitting at both the yellow trendline from 1992 and the 0.786 Fibonacci level.

Both of these indicators commonly act as resistance and support levels.

I need the price to get above 63 before I become bullish.

As long as the price remains below 63, I am bearish

The 63 price level is a logical place to expect the price to consolidate or reverse to the downside.

It is common for the price to retrace to the 0.618 and 0.500 fib levels before moving higher and I anticipate this could happen.

If the price moves lower, I will reassess at each of these levels in anticipation of a bounce or a continuation of the longer-term trend to new highs.

For the long position holders, my sell signal is a lower low below 60 which could mean a break in the trend.

Locking in partial profits with laddering sell orders is a good strategy and good for the mind.

If I miss that signal then I would be assessing how the price reacts at each of the lower fib levels.

I am Bullish above 63 and Bearish below.

I provide both the bullish and bearish Fibonacci levels from my calculations below.

BULLISH LEVELS OF INTEREST

(Take partial or full Profits)

1. 63

2. 89

3. 112

BEARISH LEVELS OF INTEREST

(Long entry or possible support level)

1. 54

2. 47

3. 40

4. 33

I hope you enjoy this analysis, and I am interested in any feedback you can provide.