Canada Markets

December HRS: Triple Top or Poised to Bolt Higher?

Cliff Jamieson
By  Cliff Jamieson , Canadian Grains Analyst
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A long-term view of the continuous December HRS wheat chart shows the June 30 high of $8.49/bushel taking out the July 5, 2017 high of $8.43 to reach the highest December trade since February 2013. The lower study shows noncommercial traders paring their bullish net-long position in each of the past two months while prices test resistance. (DTN ProphetX chart)

While not shown on the attached monthly chart, the December spring wheat contract closed 34 cents higher this session at $8.40 3/4/bushel (bu), after reaching a high of $8.49/bu during the session. The continuous December chart posted shows this move taking out the $8.43/bu high reached in July 2017, reaching the highest December trade seen since February 2013.

This brings us to the third high reached in this vicinity seen since 2014. A high of $8.29 was reached in May 2014, $8.43/bu was reached in July 2017 and now $8.49/bu has been reached in June 2021. This 20-cent range seen across these three highs indicates a potential range of resistance, the upper-end of a range traded over more than a seven-year span. This upper end may also be viewed as a triple top.

A permanent breach of this level of resistance could lead to a continued move higher, while technical analysis theory would indicate this potential to be equal the width of the channel traded. In this case, the width is $3.68 3/4/bu (August 2016 low to the June 2021 high), while when added to the top of the channel, would indicate a potential target of $12.18/bu.

Potential resistance lies at $8.51 1/4/bu (upper green horizontal line), which is calculated to be the 67% retracement of the move from the July 2012 high to August 2016 low. A breach of this resistance could lead to a continued move higher to the July 2012 high of $10.34/bu.

The bars on the lower study shows that noncommercial traders have pared their bullish net-long positions in the month of May and over the first four weeks of June, with June 29 data to be added to this total upon release on Friday. The growing concern over the state of the North American spring wheat crop will likely lead this group to take on a larger speculative position. The current noncommercial net-long position of 13,907 contracts is well below the size of the bullish positions held in 2006-2007, 2010-2011 and March-May 2014.


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7/8/2021 | 9:17 PM CDT
awesome graph! i love it!