Corn Tech Update
Grain Market Commentary
Wednesday, October 10, 2018
by Jacob Christy, Freedom Program Trader
A weaker session for the corn market amid low volume today. Trade seems more than willing to wait and see what the USDA crop report has in store before making any major moves. The past month has had a very technical feel to it but trade now looks for fundamentals to drive.
Corn was able to break a long standing descending trend line late last month, which helped stabilize futures after contract lows were scored September 18th. The markets major feature is now a head and shoulders bottom, formed with a horizontal neckline at 370. Each shoulder low comes in near 355 which should provide initial support, but also offers a clear stop loss for recently established longs if broken. To the upside, breaching the 370 neckline would also put the market above its 50-day moving average, an indicator the market has struggled to decisively clear since August. Formation objectives on a breach of 370 sit at 384 up to the 200-day moving average at 387.
Momentum indicators have moved into deeply overbought territory which could make a further rally more difficult without fundamental backing. With trade expecting growing USDA yield estimates, prices against key resistance, and the market overbought, today’s set back is no surprise. Expect more low volume defensive trade until we get through the report tomorrow. After the release keep an eye on 355 and 370 as they represent the head and shoulder formation’s key levels.