After testing resistance in three of the last four sessions, the December contract broke above the $2.67 1/2/bushel resistance to finish at $2.69 1/2/bu. on Thursday, up 1 3/4 cents. This brings the December contract to a nine-week high and represents a 16% recovery from the weekly low reached in early September.
While this looks like a positive move at first glance, caution may be in order. The gold line on the third study reflects the nearby Dec/March futures spread, which weakened 1/4 cent this session while the weekly chart shows this spread weakening 2 1/4 cents during the first four days of this week (not shown), suggesting an increasingly bearish view of fundamentals held by commercial traders.
The purple bars on the fourth study is a histogram showing a fairly steady net-long position held by noncommercial traders or investors for four consecutive weeks, while prices are viewed as being in overbought territory as seen by the stochastic momentum indicators in the second study, which could lead to a sudden sell-off and change in direction.
Today's move was realized on low volume, which has fallen for three consecutive sessions, with Thursday's volume the lowest seen in six sessions, as seen in the lower volume study.
A continued move higher could result in a test of $2.76 1/2/bu., the 61.8% retracement of the July-through-September downtrend, while this market could face unfavorable spillover should markets such as Chicago wheat or corn break to new contract lows.
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