Technically Speaking: Corn | Soybeans | Wheat
September 10, 2018
December corn remains rangebound but has put forth some clear and present risk parameters from which to gauge the next impulsive move. The short-term corrective low is $3.55 1/4 and $3.82 1/2 the short-term corrective high with a break in either signaling an attack at the wider range caps of $3.88 1/2 and $3.50 1/4. From a very short-term stance on the 60-minute chart, the trend could possibly be called up, but from an intermediate and longer-term time scale, trends are still clearly lower. This is reinforced by the fact that December corn is trading below all moving averages from the 20-day to the 200-day. A case can be made that the corn market has just completed a three-wave corrective move lower as the sell-off from $3.82 1/2 on Aug. 17 to $3.55 1/4 on Aug. 29 progressed just over 100% of the sell-off from $3.88 1/2 on July 31 to $3.66 on Aug. 13. The stochastic measure of momentum is in neutral territory at the moment and is not tipping its hand in either direction.
November soybeans are in a neutral trend at the moment, working sideways along major lows at $8.28 3/4 and $8.26 1/2. Similar to corn, a case can be made that the current correction has run its course as the recent sell-off from $9.07 to $8.28 3/4 has progressed just a bit more than the $9.22 1/4 to $8.51 1/4 sell-off from July 31 to Aug.13. This could be labeled a complete three-wave corrective sequence, or the B-wave of a larger degree ABC correction. Wave A would have been from $8.26 1/4 to $9.22 1/4, wave B from $9.22 1/4 to $8.28 3/4, and wave C consisting of a run to new highs above $9.22 1/4. Fortunately, momentum indicators such as stochastics have bottomed and are seeing slightly rising values consistent with a potential bullish divergence. A confirmation of this bullish divergence would be seen with trade above a minimum $8.51, but more preferably at $9.01. Worth noting, on-balance volume has also seen a divergence with values now bullish from a rolling 20-day scale, indicating there is more volume on up days than down days, which is a sign bulls could be taking back control.
December Kansas City Wheat is firmly inside its downtrend channel with a run at $4.93 1/4 lows forthcoming. The silver lining to this contract is it looks likely we are in the fifth and final wave of a five-wave sequence, stemming from the $6.26 highs. Wave one ran from $6.26 to $5.60 3/4, wave two up to $5.96, wave three down to $5.26 1/4, wave four up to $5.57 3/4 and wave five currently seeing price down to $5.13.
Fibonacci progression analysis also would suggest this is the fifth wave of that five-wave sequence as the 100% progression of wave one snapped on to the $5.57 3/4 corrective high, ending around $4.92 1/2, very close to the seasonal lows set back in July. In keeping with Elliot Wave Theory, wave three is usually the longest, with waves one and five spanning similar lengths. It also means, however, further losses are likely, although momentum indicators are beginning to diverge from price. This could mean the move is closer to being over than the wave sequence might suggest.
Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of grains and grain futures involve substantial risk and are not suitable for everyone.
Tregg can be followed throughout the day on Twitter @5thWave_tcronin
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