$538 marks an extremely important level.  Other resistance levels are important sell points but a 38.2% Fib Retracement level is doubly important.  Where normal resistance is a great sell point because it has the potential to mark a top or if broken to the upside, will often act as support and a position can be re-taken on the test of that support with only pennies difference from the previous sell.

But with a Fibonacci resistance level, especially the 38.2% mark, a failure to break through doesn’t just mark a top, it also reaffirms the previous downtrend  the market is in and sets up for a leg lower.  Where a normal resistance failure likely means a re-test of the lows with a good chance of holding them, a 38.2% failure likely means a new price coming that is substantially lower than the previous lows.  See chart below for details on how this particular Fib Retracement was calculated.

In our current market, I believe the Fundamentals have improved enough that the low is in; for this reason I believe that the 38.2% level will be breached and thus $538 will be taken out and a steady move to $560 is very realistic.  That is what I believe but until $538 is taken out and confirmed over a 2-3 day period, then we remain in a downtrend.  The market will tell us by breaking through $538 that we can more than just believe that $560 is in play, and that even more importantly, a bottom is in.

Watch this level closely: if we breach the level, we can start thinking of $560 Canola ($12.30) but a failure here likely means we go to $480 ($10.60) and whatever we believed about the Fundamentals was false.  If the new weather driven Fundamentals are valid, and I believe they are, then the market will tell us that and will take out $538. Price Action is your friend and will tell you what’s important.

A significant rally in Canola will drive an Acre Battle that will be Bullish for all crops we grow.