Technically Speaking

Weekly Analysis: Wheat Markets

Darin Newsom
By  Darin Newsom , DTN Senior Analyst
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Source: DTN ProphetX

SRW Wheat (Cash): The DTN National SRW Wheat Index (SR.X, national average cash price) closed at $3.94 1/4, down 2 3/4 cents for the week. The secondary (intermediate-term) trend remains sideways between $4.06 1/4 (close the week of September 18) and $3.81 1/4 (close the week of August 21). A downside breakout would imply Wave C (third wave) of a 3-wave downtrend is in place with a target of $3.56 1/4. However, an upside breakout would imply that the previous sell-off from $5.03 through the low weekly close of $3.81 1/4 made up the previous downtrend, suggesting the market is in Wave 3 of the next 5-wave uptrend with a target of $4.31 1/4. Weekly stochastics remain bullish following a crossover below the oversold level of 20% the week of September 11.

SRW Wheat (New-crop Futures): The Chicago July 2018 contract closed at $4.66 3/4, down 6 1/4 cents for the week. July 2018 SRW wheat established a double-bottom low of $4.60 3/4 last week before rallying into the close. While still indicating a possible secondary (intermediate-term) uptrend, given the recent bullish crossover by weekly stochastics below the oversold level of 20%, the market is vulnerable to a bearish breakout below the double-bottom low. If so it would project to an extension of the previous secondary downtrend to $4.46 1/2.

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HRW Wheat (Cash): The DTN National HRW Wheat Index (HW.X, national average cash price) closed at $3.68, down 5 3/4 cents for the week. Cash HRW wheat remains in a secondary (intermediate-term) uptrend on its weekly close-only chart. Initial resistance remains at $3.71, a price that marks the 23.6% retracement level of the previous secondary downtrend from $4.73 3/4 through the low of $3.39 1/4. The 38.2% retracement level is up at $3.90 3/4.

HRW Wheat (New-crop Futures): The Kansas City July 2018 contract closed at $4.77 1/2, up 2 3/4 cents for the week. The secondary (intermediate-term) trend is sideways, above initial support at the contract low of $4.63 1/4. Initial resistance is at the 4-week high of $4.88 1/2. While weekly stochastics remain below the oversold level of 20%, a bearish breakout (move to a new low) would suggest the previous downtrend could be extended to $4.47.

HRS Wheat (Cash): The DTN HRS Wheat Index (SW.X, national average cash price) closed at $6.08 1/4, down 10 3/4 cents for the week. Despite the lower weekly close the SW.X remains in a secondary (intermediate-term) 5-wave uptrend. Wave 1 now looks to be the small move from $5.71 1/4 (week of September 11) through the high of $5.84 3/4 (week of September 18). Wave 2 saw the SW.X fall back to a low of $5.72 1/4 (week of October 9) completing a typical nearly 100% retracement of Wave 1. Wave 3 now looks to have peaked at $6.19 (week of November 6), with support for Wave 4 above the Wave 1 peak ($5.84 3/4). Weekly stochastics remain bullish, indicating the secondary uptrend is still in place.

HRS Wheat (New-Crop Futures): The Minneapolis September 2018 contract closed at $6.39 3/4, down 6 1/4 cents for the week. A long-range view of new-crop Minneapolis spring wheat shows the contract to be in a secondary (intermediate-term) downtrend. The sideways-to-up pattern since mid-August is in danger of seeing a bearish breakout below trendline support this week at $6.34 3/4. If a bearish breakout would then project a low of $5.92 1/2.

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