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Advanced Marketing Class

The November 2010 soybean futures chart (top image) shows a good example of divergence. When futures made lows for the year in June, the RSI (Relative Strength Indicator) did not, failing to take out the low achieved on the previous futures bottom in May.

That helped set up the framework for the big rally into the fall. Likewise, divergence on the December futures chart in October (bottom image) was a warning sign the market might be getting tired if it couldn’t make new highs.

For a PDF of these charts click HERE.