December CBOT Wheat

Andreas

Active member
109 0
The island top formation is confirmed now and we can expect some retracement. Maybe to the 38% retracement of the move that started end of June, maybe even to the 50% level.
There is strong support at 353 1/4, the old resistance from May and June.
 

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Andreas

Active member
109 0
On the weekly chart...

We see a completed reverse H&S pattern. A retracement on the daily to the 50% level, would correspond to a retracement to the neck line on the weekly. This is not uncommon of course. But it has to stop there in order for the pattern to be valid and the next leg up. Just my 2 cents.

Good trades to you all !
Andreas
 

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oatman

Senior member
2,879 22
Island Reversal. You don't see many of them. Possibly the most powerful signal in TA.

Good luck
 

ianshep

Junior member
17 0
Andreas,

Thank you for posting the chart. The textbook Evening Star formation had caught my eye but I was too busy/lazy to post it up!

One more factor supporting a retracement from here is that the long white candle that opened the Evening Star pushed outside the top Bollinger Band (2 std devs) and the candle that closed the pattern dropped back into the band.

The conventional wisdom initial target for this BB set up is the centre of the band i.e. the 20ema, currently at about 370.

I have taken a wee short position with some trepidation as this sort of countertrend play is not my normal territory. It is often described as 'stepping in front of a freight train' which is not a particularly elegant expression. 'Catching a falling knife' is much more evocative but I can't think of how to turn the expression upside down! 'Trying to catch a space shuttle'? 'Riding a rocket'?
Hhhmmm. I'll keep trying.
 

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Andreas

Active member
109 0
ianshep,

Nice chart ! I use Bollinger Bands standard with my spread trading, because specially there they are very reliable. Only I use them with the 20 SMA in stead of the EMA. If the retracement goes back to the 20 SMA initially, this corresponds with the 38% retracement. I agree with you about the 'freigt train' :D

Good trades to you !
Regards,
Andreas
 

Andreas

Active member
109 0
Wheat bounced off support at the 38% retracement. Looks like it is ready to continue up. Fridays move upward however was in light pre-holiday trade, so don't be surprised if the markets give some gains back, when they open again on Tuesday.

Good trades to all,
Regards,

Andreas
 

motty

Newbie
5 0
I am new to this game, and currently have an open position on wheat, It is a down bet and it surprised me a little the gain it made on friday, I was a bit disappointed as I had just broken through the spread into profit and then suddenly it sprang the other way. Do you think it will rise further or continue to fall like it has over last few days. Any comments/advise greatly rec'd.
Motty
 

JonnyT

Senior member
2,560 22
It's still in an uptrend so personally I wouldn't short yet.

Anything below 354 and I'll join in with a short.

JonnyT
 

motty

Newbie
5 0
Its at an all time high though i thought and have been advised that it will start to drop, 354 seems a hell of a drop from 380. do you think it can go even higher
Motty
 

Andreas

Active member
109 0
The fact that it is at an all time high, does not mean it can not go higher. The longer term trend is still up, and so far the pull back after the island top, can be regarded as a correction in an uptrend. Just be cautious.

Best regards, and good trades !

Andreas
 

ianshep

Junior member
17 0
Motty,

The pattern discussed above was at the CONTRACT high for December Wheat and led to a 38% retracement (of the advance) back to the 20 day moving average. FWIW, I'm back in long for the next upleg.

I have no idea what the all time high for wheat is, but if you look at this monthly continuation chart (i.e. not the chart of any one contract) you'll see that wheat was significantly more expensive at this time last year and was twice the price in 1996!
 

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Andreas

Active member
109 0
On the weekly chart the neck line has been broken, which negates the reverse H&S formation.
On the daily chart prices are at the 50% retracement of the rally which started in June. The next few sessions will show if the prices can find support here. If support is broken it would mean that the longer term uptrend is over.
 

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JonnyT

Senior member
2,560 22
Andreas,

I think the uptrend is broken and am looking for further weakness.

54 was my critical level.

JonnyT
 

Andreas

Active member
109 0
JonnyT,

Yesterdays close has proven you right. Let's see where it holds. What are you currently trading, if I may ask ?

Have a good weekend,
Andreas
 

bgold

Established member
532 5
Don't yet give up on wheat!

Yesterdays' reversal bouncing of resistance at 348 1/2 is a bullish engulfing pattern confirming another one of 30/31July. It keeps the bullish scenario open. Especially, if you subscribe to elliott wave count that this low is ii of 3 up, projecting Wheat long term toward the '97 highs and short term above the August highs. One should, though, recognise the considerable resistance in the 365-367 1/2 falling window/gap.
 

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