Good morning Traders!
With much of the inflation worries setting around food inflation and supply chain
constrain, soft commodities have been on the radar of fundamental and technical traders.
Today I’d like to take a look at two soft commodities that I am watching closely for
potential setups.
Corn – Looking For Retracement
Let’s start with a look at Corn, on the weekly chart (see Corn Weekly), price retraced to
the breakout level of around 700 but failed a couple of times in the attempt to break it
higher, and ended up printing a weekly Lower High. The push lower also broke a strong
S/R level around the 660 area.
Turning the attention to the daily chart (see Corn Daily), and we can see many touches at
the 660 level before breaking through it to print a daily Lower Low. I’ve also drawn the
Fibonacci retracement of the latest move, and the 660 strong S/R level is clustering very
nicely with the 61.8% retracement. I am looking for the price to retrace to around this
level, show me signs that the buyers are done, and then I’ll be looking for a potential
setup to join this strong sell.
Wheat – Downtrend Confirmed
Yesterday move on Wheat saw the market breaking the very strong level of around 740
(see Wheat Daily), the market has moved quite a bit already since the last daily
retracement, and so I would expect a buyer reaction attempting to defend this level at this
point. But I would like to take a closer look at what yesterday move has confirmed, and
that is a downtrend on all the higher timeframes, with now the monthly chart moving into
a confirmed downtrend (see Wheat Monthly).
With that in mind, I am looking for short positions on Wheat, however(!), given the latest
selloff and the strength of this level (see Wheat Weekly), coupled with the overextension
between price and it’s moving averages, for short setups, I either want to see a
retracement and another attack on the 740 level, or if the market will continue lower from
here, then a decisive close and a hold below this level, with then a pullback to test this
level from below.
Happy Trading!
