Canada Markets

Positive Chart Signals seen on the December HRS Chart

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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December MGEX spring wheat closed higher for a third session, while has traded largely sideways since Sept. 20. Tuesday's move saw a close above the contract's 100-day moving average. The blue bars on the histogram of the second study show noncommercial traders paring their bearish net-short position for three consecutive weeks, a supportive feature for this market. (DTN ProphetX chart)

The December MGEX spring wheat contract gained 5 cents on Tuesday, its third consecutive higher close that resulted in a move above the contract's 100-day moving average at $5.41/bushel as well as the 50% retracement of the move from the contract's June high to September low calculated at $5.39 3/4 per bushel. This could pave the way for further gains to the 61.8% retracement level at $5.52 1/4 per bushel. The move also resulted in a bullish outside bar formed on the daily chart, with Tuesday's range trading both lower and higher than the range traded in the previous session.

While not shown, the weekly chart shows this week's trade consolidating within last week's range in sideways trade. Since Sept. 20, price has consolidated within a 40-cent range from $5.19/bu. to $5.59/bu., with Tuesday's close just above the mid-point of this range. A return to an uptrend would require a move above the recent high of $5.59/bu. reached on Sept. 26.

The blue line on the first study shows the December/March futures spread narrowing from minus 14 3/4 cents to minus 13 1/2 cents between Oct. 2 and Oct. 8, a sign of supportive commercial buying interest behind the move in the futures.

CFTC's Commitment of Traders report shows noncommercial traders paring their bearish net-short position during the past three weeks to a net-short of 7,349 contracts as of Oct. 1, the smallest bearish position held in 13 weeks. As of Sept. 10, a record noncommercial net-short position of 18,673 contracts was held, while the delayed harvest on both sides of the Canada-U.S. border has pushed the bearish speculative trade to the exits. When Friday's CFTC data is released for Oct. 8, this group may be seen holding a bullish net-long position for the first time since Aug. 28, 2018.

As seen on the lower study, the stochastic momentum indicators on the daily chart, as well as the weekly chart (not shown) are trending higher while in neutral territory, indicating that a further move higher remains possible prior to prices reaching over-bought territory.

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Cliff Jamieson can be reached at cliff.jamieson@dtn.com

Follow him on Twitter @Cliff Jamieson

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