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Corn in Solid Downtrend, But Due for Corrective Bounce

00:00AM Oct 07, 2008
    December corn futures at the Chicago Board of Trade are presently mired in a 3.5-month-old downtrend on the daily bar chart and on Tuesday hit a fresh 12-month low of $4.16 1/2 a bushel. The bears are in firm technical command after having pushed prices below several key technical support levels recently, including below what was major psychological support at $5.00 a bushel.
    Indeed, corn futures prices have dropped nearly 50% from the late-June contract an all-time high of $7.99 1/4, basis December futures.
    The next downside price objective for the corn market bears is to push and close December futures prices below major psychological support at $4.00 a bushel.
    The corn market bulls can correctly argue that December futures prices are now short-term oversold, technically, and due for at least a corrective upside bounce very soon. The 14-period Relative Strength Index overlaid on the daily bar chart for December corn shows a reading of 23.63. Any RSI reading below 30.00 does suggest a market is overdone on the downside and due for a corrective rebound soon. Also, the last time the RSI line on the daily chart moved into oversold territory was in August, at which time December corn futures did experience a solid corrective bounce of over $1.00 a bushel.