Technically Speaking

Weekly Analysis: Corn and Soybean Markets

Source: DTN ProphetX

Corn (Cash): The DTN National Corn Index (NCI.X, national average cash price) closed at $3.48, up 12 1/2 cents for the week. The secondary (intermediate-term) trend turned sideways-to-up with last week's bullish breakout. However the NCI.X is already testing resistance at $3.51 3/4, a price that marks the 61.8% retracement level of the previous downtrend from $4.00 1/2 through the low of $2.73. Though weekly stochastics have climbed back above the overbought 80% level, a move above resistance by the NCI.X could lead to a test of the 76.4% retracement level at $3.70 1/2.

Corn (Old-crop Futures): The July contract closed 15.00cts higher at $3.87 3/4. Despite last week's double-digit rally the secondary (intermediate-term) trend remains sideways. Resistance is at $3.98 1/4, a price that marks the 50% retracement level of the previous sell-off from $4.56 1/2 through the low of $3.40 1/4. If the contract breaks through this resistance, the next target is the 67% level up at $4.17 3/4. It should be noted that July corn's open interest declined by 199,594 contracts last week with Friday's CFTC Commitments of Traders report showing noncommercial interests reducing their net-short futures position by 67,042 contracts for the week ending Tuesday, June 6.

Corn (New-crop Futures): The December 2017 contract closed 15.00cts higher at $4.06. The contract spiked through resistance at $4.07 1/2 last week, posting a high of $4.09. This would indicate a test of its previous high at $4.22 3/4 is possible. However open interest for Dec corn declined last week by 24,034 contracts, usually viewed as a bearish technical combination (market rally on decreased open interest).

Soybeans (Cash): The DTN National Soybean Index (NSI.X, national average cash price) closed at $8.76, up 21 cents for the week. As discussed as a possibility last week, the NSI.X established a bullish island-reversal on its weekly chart. One week after leaving a bearish gap between $8.59 1/2 and $8.55, the NSI.X left a bullish gap between $8.55 and $8.56 1/4 before closing at its weekly high. Weekly stochastics are bullish below the oversold level of 20% indicating the market could continue to gain momentum. An initial target is up at $9.08 1/2, a price that marks the 23.6% retracement level of the previous downtrend from $11.12 through the low of $8.45 3/4.

Soybeans (Old-crop Futures): The July contract closed at $9.41 1/2, up 20 1/4 cents for the week. Old-crop soybeans look to have established a secondary (intermediate-term) uptrend on its weekly chart. However, as with corn, open interest for the July contract (and the futures market in general) decreased during last week's rally, usually viewed as a bearish technical signal. If July soybeans are able to generate continued momentum this coming week the initial upside target is $9.57 1/2, a price that marks the 23.6% retracement level of the previous downtrend from $11.13 through the recent low of $9.09 1/2.

Soybeans (New-crop Futures): The November 2017 contract closed at $9.48 1/4, up 22 3/4 cents for the week. The contract's previous secondary 3-wave downtrend looks to have come to an end, replaced by a sideways trend that has the chance to turn up. A move to a secondary uptrend would be confirmed by a new 4-week high above $9.71 1/2. This would also be a test of resistance at $9.79 1/4, a price that marks the 50% retracement level of the previous downtrend from $10.43 through the low of $9.15 1/2.

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