Soybean Oil Chart Indicating Possible Trade Set-Up.

  The December 2012 soybean oil chart shows that soybean oil prices have been in a trading range since the first of July 2012 with the 52 cents per pound area providing strong support. According to the weekly and monthly soybean oil charts, soybean oil is in a longer term downtrend and a close below the support at the 52 cent level would provide confirmation that the longer term downtrend has resumed. According to some basic Elliott Wave analysis, December 2012 soybean oil may have completed a 1-2, 1-2 formation which would be followed by a wave 3 of 3. Per Elliott Wave theory, a wave 3 of 3  is a powerful move and so a wave 3 of 3 to the downside would be a very powerful move to the downside in soybean oil. In fact, a strong wave 3 of 3 move to the downside could take prices all the way down to the 40 cent per pound level. This is very strong support on the monthly chart.

  If I were to get a signal to short this market, I would buy a December 2012 soybean oil put. The December 2012 soybean oil options expire on November 23, 2012, which is 113 days as of August 2, 2012. As of this post on August 2, 2012, December 2012 soybean oil is trading at 54.42 cents per pound.