Canada Markets

After reaching a low of $6.97 1/4 per bushel on the week of Sept. 23, the December hard red spring wheat contract gained 68 3/4 cents to reach a recent high of $7.66/bu. on the week of October 21. The trend reversed after reaching the $7.66/bu level, while the following week of October 28, prices failed to find support at the 38.2% and the 50% retracement levels of the uptrend from $6.97 1/4 to $7.66/bu.

This week, two more support levels have been broken, which are the 61.8% retracement level at $7.23 1/2/bu., which was broken on Monday and the 66.7% retracement level at $7.20/bu., which was breached on Tuesday. The weekly chart, as attached, indicates that the hard red spring wheat contract has moved back near its down-trend line which has been in place since the week of Nov. 26. There is perhaps little potential chart support between today's close and the $6.97 1/4 close, although the $7.00/bu. level may provide psychological support.

The on-board volume indicator shown on the upper study provides a means of helping further understand the impact of volume and its relationship to price action. The theory is that on days of increasing prices, volume is dictated by the buyers, while on days of declining price, volume is dictated by the sellers. The calculation is made by assigning a positive number to volume on up days, or adding the volume total, while assigning a negative factor to volume on down days, or subtracting volume.

While the indicator can be used to look for instances of divergence between price and volume to warn of a possible trend change, in this case, it can simply act as confirmation of the existing trend, which is clearly lower as is the trend in price.

The lower study indicates the end to the contract's bullish upward momentum as seen with rolling over of the weekly stochastic indicators. The faster moving blue %K line crossed the slower %D line on Oct. 28 and momentum is seen to the downside.

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

(ES)

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