The March 2017 soybean meal futures (ZM) surged from a February low of 269.9 to a June high of 389.8. Since June, soybean meal has retraced 75% of that advance, dropping as low as 297.6 in September.
Despite the deep pullback, the initial surge indicates a new uptrend is underway. This outlook is based on significant developments this year that show bulls are now stronger than bears. The early-year rally was larger than any down waves seen over the last year-and-a-half, and the rally was significantly larger than any prior up waves seen in the last several years.
From September through to the end of October, the retracement formed a rounded bottom. This indicates that selling on the retracement has stalled, and another major rally could be starting.
If this is an uptrend, the next rally should exceed the 389.8 high, but that could take several months to occur. Assuming a new high is a bit aggressive at this point, though. A shorter-term target near 350 to 355 capitalizes on a move higher, but doesn't assume a new high (which may not come).
Figure 1. March 2017 Soybean Meal, Daily Chart
Based on the choppy price action between September and November, this may not be a "clean" bottoming process where the price heads higher from here. The price may continue to oscillate, creating false breakouts below recent swing lows, before it moves significantly higher. This choppy trading allows for good entry points on false breakouts or pullbacks toward recent swing lows, as a stop loss can be placed in relatively close proximity (below false breakout low or support) creating a high reward-to-risk trade.