Paris Rapeseed May Climb 7.2% in Retracement: Technical AnalysisRudy Ruitenberg
Rapeseed futures may rebound to 385 euros ($513) a metric ton in Paris after halting a downward trend, implying a 7.2 percent gain from the Aug. 9 close, according to technical analysis by French farm adviser Agritel.
The chart for the November contract shows a support level at about 355 euros, and the price is close to rising above the 20-day moving average, a bullish signal, said Sebastien Techer, an analyst at Agritel. The attached chart shows 385.47 euros would be a 38.2 percent retracement of the drop from June 3 to July 31, a level singled out in so-called Fibonacci analysis.
“Clearly there are signals of a small rebound,” Techer said. “We’ve done a double bottom. We could test the 20-day moving average, and if we break it we could go to 385.”
A double bottom is a charting pattern term to describe a drop, a rebound, a similar drop to the original one and another rebound.
The oilseed may rebound to that level in the next month, according to the Agritel analyst.
Rapeseed for November delivery, the contract with the biggest open interest, has declined 16 percent since the start of the year on prospects for rising U.S. production of soybeans, which like rapeseed are crushed to produce cooking oil and animal feed. The November contract fell 1 percent to 359.25 euros a ton on Aug. 9.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index.
Fibonacci analysis is based on a theory that prices tend to drop or rise by certain percentages after reaching a high or low. The numbers are based on a sequence published by 13th century Italian mathematician Leonardo Fibonacci. A support level indicates a price at which buy orders may accumulate when a security is falling.