Technically Speaking

A look at the daily chartof the December Chicago wheat contract could be enough to give market bulls hope that the minor (short-term) trend is set to join the secondary (intermediate-term) uptrend, and that combined it could turn the major (long-term) trend up as well. That's quite a sentence, I know, but the charts may agree with me.

If you go back to Monday's trend table (Technically Speaking blog) you'll see that the minor trend is sideways, the secondary trend is up, and the major trend is down. In regards to the latter, keep in mind the blog post from October 25, 2013 (Wheat Like the Phoenix) that talked of the long-term monthly chart nearing a bullish turn that would indicate the beginning of the third leg uptrend in Chicago wheat. It now seems like the short-term daily trend is nearing the same situation.

Note that the Dec Chicago contract has held support near $6.60 3/4, a price that marks the 67% retracement level of the previous minor uptrend from $6.35 1/2 through the high of $7.11 1/4. Monday (November 4) saw the contract post a low of $6.62 before equaling that price during the overnight session leading into Tuesday morning. At the same time, daily stochastics (second study) are in single digits, reflecting a dramatically oversold short-term situation and hinting at a possible bullish crossover (the faster moving blue line crossing above the slower moving red line) in the near future.

If the minor trend was to turn up this week or next, and the secondary uptrend regains its momentum, then the long-term monthly chart would almost certainly show a bullish crossover by stochastics at the end of November (though as we all know, in commodities there are no guarantees). This complex if/then statement would result in a long-term price objective near $9.96, the 61.8% retracement level of the previous major downtrend from $13.49 1/2 through the low of $4.25 1/2 (discussed in the previously mentioned October 25 blog post).

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