Technically Speaking

Monthly Analysis: Grain Markets

Source: DTN ProphetX

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.24 1/4, up 9 cents for the month. While the market continues to indicate it's in a major (long-term) 5-Wave uptrend, the spike low of $2.7302 (August 2016) remains a problem. This took the NCI.X below what was the Wave C low of $2.81 1/2 from October 2014, something not normally seen in an uptrend. Also, the NCI.X continues to deal with a bearish reversal posted during June 2016 as it traded outside the May range before closing lower. Still, the NCI.X established a new 4-month high of $3.34 in January, generally viewed as a bullish signal. Resistance is between the old consolidation range of roughly $3.24 to $3.80.

Corn (Futures): The March contract closed at $3.59 3/4, 7 3/4 cents on the monthly chart. The market's long-term monthly chart remains a mix of signals with the last major crossover by stochastics bullish (October 2014) followed by a move to a new low of $3.14 3/4 (August 2016). Also, the March contract posted a new 4-month high of $3.71 in January, a signal that could also be considered bullish (based on the 4-month rule). Resistance is within the old consolidation range between roughly $3.47 and $4.17.

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $9.48 3/4, up 17 1/2 cents for the month. The NSI.X still looks to be in a 5-wave uptrend with the October low of $8.77 3/4 the bottom of Wave 2. In a normal uptrend Wave 3 would surpass the peak of Wave 1, which in this case is the high of $11.12 from June 2016. Initial resistance remains near $10.25, a price that marks the 23.6% retracement level of the previous downtrend from $17.50 (August 2012) through $8.05 (March 2016).

Soybeans (Futures): The March contract closed at $10.24 1/2, up 20 1/2 cents on the monthly chart. While the market remains in a major (long-term) 5-Wave uptrend, it continues to consolidate between resistance near $10.67 1/4 and support near $9.30 1/4. The former is the 23.6% retracement level of the previous major downtrend from $17.89 (September 2012) through $8.44 1/4 (November 2015) with the latter the 76.4% retracement level of Wave 1 from the $8.44 1/4 low through the high of $12.08 1/2 (June 2016). Weekly stochastics remain neutral, with the previous major crossover bullish at the end of January 2016.

HRW Wheat (Cash): The DTN National HRW Wheat Index (HW.X, national average cash price) closed at $3.39, up 19 1/2 cents for the month. The major (long-term) trend remains up as the HW.X posted another new 4-month high of $3.58 1/2 during January. However, the market could be approaching the peak of Wave 1 of its 5-Wave uptrend. If so it could see nearly a full retracement back to its major low of $2.79 3/4 (August 2016).

HRW Wheat (Futures): The March Kansas City contract closed at $4.29 1/2, up 11 cents for the month. The market continues to indicate it's in a major (long-term) 5-Wave uptrend, starting with the low of $3.95 from August 2016. March futures posted a new 4-month high of $4.57 1/2 during January, a mark that could prove to be the Wave 1 peak. If so, a near full retracement back to the previous low is possible.

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