What’s the future for the soy oil?
The Soy family has been showing an incredible run the last few months and record prices are being seen in all three of them. Even though both Soy beans and Soy meal, have been showing huge increases, the Soy oil is the only one of them that has surpassed highest price since 1983. When we look at the monthly chart, only one month since September 2006, has closed lower than the open. A price movement of about USD 14,000 per contract in 14 months, where only one was 
closing lower, can only be categorised as a very strong bull market. Having broken through the last price resistance the last 25 years, the sky could be the limit. But on the other hand, the market could be running out of gas.
To sustain a move that aggressive, the market needs to be very strong and any sign of lower strength in the market should be taken seriously. When looking at the daily, weekly and monthly charts, the Soy oil market is starting to show signs of it being overbought. On the daily chart, the Soy oil has broken through a resistance that formed just under 46 cents a pound. The breakout on the 20 of November, was followed by three days of higher highs and a positive closing. The resistance that was broken through is of course important for the further upward momentum, but when considered that it was broken during the Thanks giving holiday week, the indications should be weighted accordingly. The holiday closings of the markets can have effect, as not all the “players” were active. To see this move form it self, we need to wait for this week to end.
But what are the charts telling us. The daily chart is showing us a positive upward price movement that has just broken through a resistance at around the 46 cents mark. This resistance is therefore forming a support level for 
a continued upward price movement. Should that support break, we see a small support area at around 41.60 cents and a bigger one at around the 40.78 mark. After that we have a rather strong support at around 39.90 cents. On the surface the daily chart shows a good trend being carried out and an ideal “jump on the train” possibility, but when looking deeper there are some things to take into consideration.
There is a divergence in the price movement and the Slow Stochastic indicator (SSTO) as well as the Williams AD indicator (AD). This divergence indicates a possible reversal of the trend, or at least a correction. The time and strength of that correction is difficult to pinpoint, but the supports mentioned earlier do give some indications.
Both the weekly and monthly charts, indicate a possible overbought market and coincide with the daily chart in the respect that lower prices, or corrections should be taken into account. The first level of support for a bull market on the weekly chart is identical to the support of 39.90 cents on the daily chart, and after that we are looking at a price level of around 38.10 and 33.32 cents, a level close to the 50% retracement on the weekly chart.
The monthly chart shows no support levels during the run from October 2006, but the 50% retracement level 
is at around 35.15 cents and is quite close to the top of the 2003 – 2004 bull run. Other supports are not easily visible and could indicate a rather quick pullback, should it arise. The monthly chart also indicates an overbought market when looking at the SSTO indicator.
When looking at the aggressive bull run and with all three charts indicating an overbought market, all decisions about a long position should be carefully considered before it’s taken. Of course the market could continue to rise, making a long position profitable, but the indications are that a correction is at hand. The problem is always, when will it happen and how strong will it be.
