Technically Speaking

July KC Wheat: A Matter of Time

Source: DTN ProphetX

In my weekend Technically Speaking update for the grain markets, I mentioned that July Kansas City wheat contract might be giving another false technical signal with Friday's bearish close. As it turned out, it was. Just not the signal I was looking at.

Last week saw July KC wheat post a new high (for its uptrend) of $5.93, the previous week's high being $5.90 1/2, before falling below the previous week's low of $5.54 1/4 and closing lower for the week. From a technical point of view this is a classic bearish reversal on its weekly chart indicating a change in its secondary (intermediate-term) trend. However, weekly stochastics were still bullish indicating the secondary trend was still up.

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

So what is going on with the mixed signals? The answer lies in the further dissection of the contract down to the daily chart. There we see that July KC wheat daily stochastics established a bearish crossover above the overbought 80% level on March 23 before extending to its new high on Monday, April 6. Last week's sell-off now has the contract testing minor (short-term) support near $5.43 1/4, a price that marks the 67% retracement level of the previous minor uptrend from $5.22 3/4 (March 6 low) through the $5.84 1/2 high from March 23.

Note that daily stochastics are fast approaching the oversold level of 20%, setting the stage for another bullish turn of the minor trend. This could occur as the contract itself tests, or moves below, its $5.43 1/4 technical support level.

Adding the daily chart into the analysis, here is the combined picture of Kansas City wheat:

Major (long-term) trend on the continuous monthly chart is sideways with initial support at the March low of $5.14 1/4.

Secondary (intermediate-term) trend on the July KC weekly chart is sideways-to-down with support at its previous low of $5.22 3/4.

Minor (short-term) trend on the July KC daily chart is down with support at $5.43 1/4, then the same $5.22 3/4 as the weekly chart.

To track my thoughts on the markets throughout the day, follow me on Twitter:www.twitter.com\Darin Newsom

P[] D[728x170] M[320x75] OOP[F] ADUNIT[] T[]
P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]

Comments

To comment, please Log In or Join our Community .