DTN analysis shows last week's December spring wheat close at the lower 20% of the five-year range for the week. Spring wheat is viewed as historically cheap, but has reached a lower low each day since, and has fallen 12 3/4 cents over the first four days of this week. This is a time of year when the seasonal trend for wheat would typically see price move higher from late-September to late-February.
Thursday's close resulted in the first higher close realized in six sessions on the December contract, with a gain of 1/2 cent to close at $5.24/bushel. This was achieved only after the contract reached its lowest point in 30 sessions on Thursday, while the close near the top of Thursday's trading range may warrant consideration.
Thursday's trading bar came within a 1/4 cent of a perfect doji pattern, or a bar or candlestick where the session's open and close are equal. Given the close near the upper-end of the range, this signals what is viewed as a long-legged doji, in this case, a situation where buyers have won the session's battle for direction and sentiment may be changing.
Resistance on the daily chart is seen at the contract's 50-day moving average at $5.25 1/2 per bushel. Thursday's close held above the 50% retracement of the move from the September low to September high at $5.22 3/4 per bushel for the second straight day. Additional support lies at $5.14 1/4, the 61.8% retracement of the same uptrend and the 67% retracement of this move is seen at $5.10 1/4 per bushel.
The lines on the first study shows weakening futures spreads, a signal of a growing commercial bearish sentiment, while the blue bars on the histogram on the second study points to noncommercial traders reducing their bearish net-short futures position over the past six weeks, as of the most recent Oct. 22 report.
Cliff Jamieson can be reached at firstname.lastname@example.org
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