Canola nearing chart resistance

CNS Canada –– ICE Futures Canada canola contracts have trended higher for the past two weeks, with a rally in Chicago Board of Trade soyoil providing an added boost on Wednesday.

While the nearby technical signals may be pointing higher, canola is also nearing major chart resistance.

The January contract closed Thursday at $527.40 per tonne, near the best levels for the front month since June.

Looking at weekly charts, the $530-$540 per tonne level provides solid resistance for the front-month canola contract going back to 2013. That could limit the upside, at least from a technical standpoint.

On the other side, the 20-day moving average comes in at $515.70 per tonne, which could be nearby downside target, with the 40-day average coming in at $503.30 per tonne.

The relative strength index (RSI) is sitting just below oversold territory, at 68. Anything above 70 is said to indicate an oversold market due for a correction.

Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow him at @PhilFW on Twitter.

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