CBoT wheat weeklyThe weekly continuation chart shows that the price has been moving in a long term descending trending price channel that started in July of 2012 at around the 900/930 level and gradually channeled price down to 466 in September 2014 after which price made, although reluctantly, a new low at around the 485 level during August 2016.
From late December 2016 onwards price hesitantly started making modest new highs and has not tested back the most recent low. The interesting in this price channel is the fact that price has not been testing the lower line of the channel since September 2014 and made only one modest lower lows on the chart since.
Price has developed a descending wedge that roughly started between May and September 2014. The TA rule of an ascending wedge is that price, eventually, will break out of same wedge to the upside which usually happens between 2/3rd and 3/4th of the wedge and which has happened 3 weeks ago indeed. Usually, price then makes a test back to the upper line of the wedge which then serves as support which now seems to be developing.
ZW1! trade ideas
Wheat Has Completed A Bearish Butterfly and AB=CD PatternI had an order set to short 1 pip above the current high of the day and didn't get picked up. I have since moved the order to the high as shown in the chart. Risk:Reward is pretty nice and looking left (further left than on this chart) there is some structure which supports this as a supply zone.
Wheat has been looking pretty bullish so it would probably be advisable to wait for a bearish signal on a lower time frame. Let me know what you think about Wheat!
CBoT wheatThe daily chart shows that price has been moving within the boundaries of a descending price channel until January 4 when price broke out of same channel at the upside. With the break out of price the upper line of the price channel has now changed its character from resistance to support. The zone between, roughly, 410 and 400 is now a supportive region which has been tested back on January 11 and which could be tested one more time before price hikes up.
Still neutral in the range. Trades at equilibriumFrom this setup we can not really decide what to do. It can either was through the thin and flat Kumo cloud, or Kijun holds and then price reverses up quickly. Not an easy call, as my system is a trendfollowing system, while Wheat it's clear Wheat has not been trending since July-August/2016.
Maybe haOscillator gives slightly bigger chance for Kijun to hold. We need few more days to get clarity.
Based on technical setups, Corn is still a better candidate for long in case.
WHEAT | Weekly Chart A rather logical looking interpretation. There's a reasonable degree of support, whilst we're buying in the lowest percentiles of the last decade. Further, the probability of the downtrend being breached looks increasingly likely. Further, the return distribution of commodities is particularly convex or asymmetric with a long right tail. Thus, we can give the position similar treatment to that which we might a long option trade.
Maybe it's different this timeObviously we need a break and confirmation, but Heikin-Ashi price action looks different compared to three previous cases, when Wheat could not hold gains at its trading range top, and fell sharply.
If range breaks on top side, bullish price objective will be 470-480.
(Note: market is closed today)
CBoT wheatWheat:
Price has made a decisive move up during the past week and broke out of the descending price channel. The upper line of same price channel has been serving as resistance during the past 6 months and is considered to be support now. We are now looking for a pullback of price towards the supportive zone from where we expect price to make another impulsive move up to the 440 region.
Indecision, inverse divergence, some positive biasWheat market has been struggling to find direction since October. Is it just another consolidation of the long term beari market, or can it be some kind of bottom building?
Weekly:
- Major beartish trend since the July/2012 peak. Ichimoku has been bearish since 2013.
- Market has been consolidatig for almost 4 months now. No lower low since Aug/2016.
- Heikin-Ashi signal is neutral, shows indecision. haDelta crosses above SMA3 but the indicator is stuck at zero. haDelta+ points down, but has no momentum
- MACD is below zero, but no bearish cross right now.
- EWO is bearish, but value ticks higher.
- Bearish supports are: 440 and 455. A weekly close above 455 would open space for a strategic bull market.
Daily:
- Ichimoku is neutral, all averages are flat arund 410 level, and Kumo ahead is thin. This means market has not been trending for 52+26 = 78 days.
- Heikin-Ashi has some bullish bias now. 7-8th/Dec market failed to continue bearish. After a doji candle we have the second green candle today (with somehow less convincing lower high -> bit of momentum loss). haDelta+ is above zero and points up.
- MACD showed/shows something interesting too: looks like an inverse negative divergence, which means that MACD made a lower low, while price did not. This is often an early bullish signal. Let's see if MACD crosses up, to confirm more bullish force
- EWO is neutral.
While the big picture is still neutral, in short term bearis may step back and bulls may get stronger. With a close above 416 market could retest 440-455 strong supp/res zone.
I am playing the long side (from 407.50), without any serious leverage, and with a relatively tight stop.
CBoT WheatWheat:
Price made a very strong move down during Monday's session and broke through our first supportive level. It then tested the pivotal support which held after which price created a 'morning star' pattern which is a reliable reversal pattern.
We keep our bias unchanged bullish. The low of last week at 398.75 has now become pivotal support.