Canola nearing chart resistance

CNS Canada — The ICE Futures Canada canola market remains in a steady uptrend from a chart standpoint, with the May contract posting gains Monday for the 11th straight session.

However, the futures are getting very close to upper resistance.

May canola settled Monday at $530.50 per tonne, after climbing by roughly $30 over the past month. The contract is nearing an upside target around $533 per tonne, which is where the market ran into resistance in November.

Beyond that, resistance can be seen at about $537.90, with the next visible target on the weekly charts coming in at the lofty level of $570-$580, last seen when the July contract went off the board in the summer.

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Many short- and medium-term technical indicators are still looking bullish for canola, which should keep speculators interested on the buy side.

However, the Relative Strength Index (RSI) is in overbought territory, which could open the door to profit-taking.

If canola does turn lower, a move toward the 200-day moving average would see May canola fall to $511 per tonne, losing roughly $20 per tonne. The 20-day average comes in at about $513 per tonne.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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