Each week Longleaftrading.com will be providing us a chart of the week as analyzed by a member of their team. We hope that you enjoy and learn from this new feature.
In the past week of trading, I feel that the most impressive chart in the commodity markets was the July Wheat Futures.
The Wheat has been under pressure for more months than I can remember. The selling in the market has been justifiable from a supply perspective after global yields more than met expectations for global demand. An enormous crop was seen in parts of Europe, which has been the biggest weight on the overall prices. This led funds and speculators to a predictable pattern of selling all rallies, and ultimately led to a very hefty net short position.
Last week, the market targeted the same price from December 2011 before rallying over a dollar in a few short days. Not only did it break above the resistance trendline, it closed convincingly above in the same day. This was seen as a very bullish indicator. The market next targeted the Fibonacci 50% retracement on Sunday night before finally falling 25 cents. Today (May 21st), Wheat looks to retest the highs in early trade.
It is important to note that the Grain Complex overall began recognizing new trading hours on Sunday night and will be traded 22 hours a day. If the Grains have reason to reverse like Wheat has done recently, traders may have to get used to larger moves in overnight sessions.
Keep in mind that the overall fundamentals for Wheat have focused lately on the dwindling “old crop” supply and also began to take note of the new crops this year that are experiencing unfavorable, dry weather early in the planting season. News like this has been enough for many of the funds and speculators to begin unwinding their net short positions and booking gains. This also attracts the new buyers that were patiently waiting for a reason to buy into a very oversold market. This combination of traders is what drives a market so quickly in such a short time frame.
I believe that traders will continue to buy dips in Wheat until the news changes. Technically it is already due for some stabilization. The most attractive support levels to consider buying would be (reference attached chart) the prior highs from February around $7, and below that $6.60 where the market once saw trendline resistance. If the Wheat can close above Sundays high of $7.20, look for a test of $7.50 and possibly $8 from there.
Good luck to you all and please feel free to contact me directly at my office with any questions. I would appreciate hearing your thoughts and ideas.
Brian Booth
Senior Market Strategist
888.272.6926
Brian,
Very insightful chart. I like the mix of technicals and fundamentals you use. Uou seem to use a very common sense, even keeled approach to markets. I have been looking for someone like you to work with. Do you work with institutional or retail traders? Do you provide market advice? What services do you provide?
Thank you Chandler,
I work with any and all traders that are focused on trading futures and options on futures. My role varies per the needs of the customer, but my main operations include educating new investors, on how to trade the market, operating as extra "eyes and ears" for customers who do not have the time to follow the markets every day and all day, and when called upon, I recommend ideas and strategies to my customer base. The company that I represent provides all of the best trading platforms and chart packages in the market, and I personally provide technical analysis of the charts to those traders who are interested (the chart shown above is an example of the information I provide).
Please feel free to call or email me with any questions. I would appreciate am opportunity to speak with you further.
(888) 272-6926
Yesterdays weekly crop progress report in the US held the Wheat in the lower end of Mondays trading range but so far, no big surprises in the overnight trade.
signed into ino to see what adam learnt from the best trader in the world,and could not locate the article.