December corn continues to fall, moving as much as 21 cents lower through the early part of Wednesday's trade. Along the way it took out the key price support level of $7.33 1/2, indicating continued pressure should be expected.
Why is this price so important? To begin with it marks the 33% retracement level of the uptrend from $4.99 through the high of $8.49. Now that this support has given way the contract could quickly fall to the 38.2% retracement level near $7.15.
Longer-term the market seems to be building substantial downside momentum. Pressure is coming from both noncommercial long-liquidation and a less bullish commercial outlook. The latter indicated by the downtrend in the futures spreads (not shown). Given this less bullish view of supply and demand the contract could ultimately test the 50% retracement level of $6.74, a price that corresponds to 38.2% retracement level on the longer-term continuous weekly chart. This is based off the low of $3.86 3/4 from the week of August 31, 2009.
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Commodity trading is very complicated and the risk of loss is substantial. The author does not engage in any commodity trading activity for his own account or for others. The information provided is general, and is NOT a substitute for your own independent business judgment or the advice of a registered Commodity Trading Adviser.