Dec Soybean Meal Feels Good Going Down

Dec Soybean Meal Futures has been forming a wedge (or triangle) beginning June 30th on the daily chart. See the thin white trend lines with an apex converging on about 297. While doing so, it also formed a Head and Shoulders pattern. See the purple thick lines.

Today it broke the wedge trend line, and the head and shoulders neckline, to the down side. At 12:36pm ET today I Tweeted:

"Shorted Dec Soybean Meal today 10:02am ET from 292.80 with 286 target. Details coming after the close."

Here are the indications I saw:

• Evening Star candlestick pattern completed 8/3/20.
• Close below 8ema & 50sma 8/3/20, followed by a gap down and confirmation today.
• Wedge Breakout to the downside.
• Head & Shoulder Neckline Breakout to the downside.
• New swing low below 7/15/20 low.
• Stochastics not yet oversold.

The 1st Target is a beautiful confluence near 286:

• 27.2% Fibonacci extension of the yellow range (285.75).
• AB/CD (see thick white downward angled lines of equal length) ending at about 285.50.
• Trend Line (see thin white downward angled line passing through the other targets.
• Half the Head and Shoulders projected move. See thin purple horizontal line crossing through the measured move at about 284.80.

We used a stop loss of 295.20, just over today's high.

Risk: Entry - Stop = 292.80 - 295.20 = 2.4 * $100/pt = -$240 loss.

Reward: Entry - Target = 292.80 - 286 = 6.8 * $100/pt = $680 profit.

R:R = 680/240 = 2.8:1 which is great.