Wheat Tech Update

“Impressive” can describe the past six months for Chicago wheat. Open interest surged, almost every break was bought, and tops were broken weekly. Since testing contract lows in August, prices have surged $1.35. Now, after reaching a fresh sixteen month high this morning, the nearly flawless bull run saw what can be considered its first real chink in the armor.

Viewed as an early trend reversal signal, SRW futures scored a shooting star candle stick today. Prices made new highs early, but instead of that move enticing new bullish momentum, new sellers entered in controlling fashion to push the market to a lower close. This type of price action is typically followed by a corrective period as the markets attempts to find volume buyers again.

Prices did manage to hold above last summer’s highs which the market had to work hard to bust. This high and the accelerated trend line will be key support to hold in order to give confidence to recently established length. If volume buyers don’t step in there’s air under the chart for a deeper correction.

The shooting star candle is purely an academic technical signal. Many times buyers step up the following day, and the signal is broken with relative ease. It will be up to the market to determine fair value. But it does set up for an interesting end to the week from a technical perspective. Stay tuned.  

More Information on Shooting Star Candles