The following commentary does not necessarily reflect the views of AgWeb or Farm Journal Media. The opinions expressed below are the author's own.
Grain TV is a daily recap after the market close, providing opinions on fundamental analysis of market direction, influences and expectations. This daily program is produced by Grain Hedge, a discount brokerage firm that provides farmers and elevators with agricultural intelligence including live market quotes, cash bid data, the Grain Hedge Optimizer™ and mobile trading platforms, all for $7 commission per side. Grain Hedge provides tools to allow farmers the ability to trade when the markets move without having to wait for a broker and the information to execute a marketing strategy with confidence.
In today’s Technical Tuesday installment, we will examine the DEC corn chart and the
interesting formation that is near completion. Below is a snapshot of the DEC corn chart
taken from our Firetip trading software.
As you can see, we started this head and shoulders pattern in mid-May of this year.
Buyers eagerly came into the market forcing corn up to the first peak, known as the left
shoulder. Then, sellers came in at the highs pushing the market to the June 30th lows
establishing the neckline. Buyers returned and drove the market all the way up to 779
on August 29th forming the head. The buying dried up sending the market down to
the neckline near 575 on October 3rd. Tentative buying re-emerged to create the right
shoulder before falling again towards the neckline. Volume is important when examining
a pattern such as this head and shoulders formation.
Big volume forced the market to the left shoulder, diminishing volume formed the head,
and the right shoulder was formed on even lower volume, evidence that buyers have
exhausted themselves. This pattern will be complete if we break through the neckline in
the 575 area comes on increasing volume. To give our Firetip software a try, please take
a demo by clicking the button below.
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