December spring wheat shows signs of stabilizing on Tuesday, while finding support from various technical levels. While old-crop July also found support at similar technical levels, the old-crop trade resulted in a bullish outside-day trading bar on Tuesday, trading both lower then higher than Monday's trading range, while finishing higher. This was not the case with the new-crop trade, with the December finding support at Monday's low.
The December contract closed below the lower trend line of a triangle pattern formed since the April 4 low in Monday's trade, although retraced this move with a higher close on Tuesday, ending up 4 1/2 cents to $6.25/bushel and back above the support calculated at $6.23/bu. The direction of the breakout from this continuation pattern remains an unknown.
Support on this chart was found at the $6.18 3/4 cents/bu level, which reflects the 67% retracement of the move from the April low to April high. Monday's trade stalled just 1/4 cent higher at $6.19/bu, while Tuesday's low retested this level.
The middle-study shows stochastic momentum indicators turning sideways. Should indicators cross-over, signaling a shift into a potential uptrend, it would not be viewed as a bullish change in direction, which is reserved for crossovers below the 20% line.
The lower study shows the December/March futures spread, which ended unchanged on Tuesday at minus 11 1/2 cents (March over the December), signaling a neutral response on the part of commercial traders on Tuesday with noncommercial traders behind Tuesday's move. Over the past five years, this spread has averaged minus 10.7 cents on this day, suggesting the current spread remains weaker than average. A glance at the forward curve for spring wheat, a series of points reflecting closing prices for each consecutive contract, shows an upward-sloping line from the current July 2018 contract through to July 2019, which suggests a bearish view of fundamentals held overall.
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