Can cheese made from soy milk?

"There's no whey"

Pun aside (sorry for that, I'll try to do better next time), Soy futures have had a decent run lately. From June of 2018 until August of this year it's gone nowhere and while that 810-950 zone provided decent scalping opportunities, the trend from August 2020 has certainly been up and relentlessly so.

The $64,000 question - or more if you are long a sizeable futures position :) - is the most recent price range a double top from March 2018 or are we lurching higher to eclipse the 2014 high of 1,800? The answer of course is that nobody knows what the future holds BUT the most recent price action was a few pennies off my 1083 target and I'm layering in a short. The reason I'm doing so is because I am counting the most recent price action as the end of either a 3rd wave or a 5th wave off the August lows, either of which 'should' lead to a pull-back or perhaps something more, and while it is silly to try and pick a top, in my view, there is merit to do so if for example, one layers in with put spreads as I am doing. Getting in near the top provides an extra margin of safety should one be lucky enough to get it more less right.

953 is my target for this pull-back, if we are indeed getting a pull-back. The fundamental case for soybeans, whether long or short, is strong in both directions and in instances like these I find that the technical picture is more accurate then the fundamentals. I am also looking at a likely USD bounce and Commercial positioning as being in favour of weaker soy prices for now. While there are other technical aspects I look at, sentiment carries more weight and my current reading of sentiment justifies a pull-back.

In the event I am wrong, and a daily closing price above 1084 will trigger my stop-loss, the loss won't amount to much as the allocation of capital is within a pre-determined fixed amount and the put spreads will further limit the damage. Part of managing the position will allow me to add to the short and I will do so with soy bean mini-futures.

Should we reach 953, the structure of price action on the smaller time frames as well as other technical elements will give me a clue whether the higher probability direction is lurching up again to higher prices or more consolidation.

There is nothing easy about any of this and there's also nothing hard about any of this and well worth the effort. As long as the risk is understood and managed, it shouldn't end up in tears.

Happy Trading!