Soybean bullish pattern

I've have noticed a common pattern in the rise of soybean prices. After a rocky open in which prices fall briefly or (today) consolidate, prices then begin a solid rise to new or near-new highs. Then, we tend to see a sell-off later that erases a good portion of the gains, but doesn't retrace all the way to their lows. This makes for a solid, sustained, and healthy uptrend in soybean prices. This type of pattern is very typical of soybeans, as seen in the first chart at right (3 min chart).

The chart at right represents two trades for me due to the dip you can see more prominently in the 2nd chart below (30 tick chart).

Note: I started trading the March 08 contract today. Open interest is more than double the January contract, but daily volume is still below the January figures. However, I like to stay a little ahead of falling volume, so I have now changed to the March contract, which the Chicago Board of Trade has shown on their home page as their dominant soybeans contract for approximately one week now.

The rollover to the March contract increases the likelihood that soybeans will reach a higher price due to contango. We are very close to reaching the $12.00 soybean handle that has been speculated in the media somewhat. Most soybean traders that I know have been expecting -- even predicting -- this for awhile. One report I read last week said that a price of $12 would be required to encourage more farmers to grow soybeans, replacing some of the acreage that corn has garnered over the past year. Interestingly, as farmers change acreage from corn to soybeans, soybean prices may moderate, and the lower production levels of corn should be bullish for corn prices.

This second chart is beginning to show some signs of price weakness and the potential signs of a top. Note what appears to be (not yet, but may develop into) a possible divergence on the Klinger+ATR volume indicator (1st chart, above) . The yellow (on my charts, but in the screen captures here on my blog, it appears almost white) "trigger" line, which is an MA of the Klinger line, has already turned bearish, and the Klinger indicator is below it. The rather deep correction of that one red candle is indicative of further weakness in the price structure, and I am anticipating the strong likelihood of a price correction downward before the bullishness continues its uptrend.