Chicago Wheat Trapped in a Trading Range

November 19, 2008 06:00 PM
  Chicago soft red winter wheat futures on the Chicago Board of
Trade have been trading in a sideways trading range at lower
price levels since mid-October. The trading range is bound by
solid overhead technical resistance at the November high of $5.87
3/4 and by solid technical support at the October low of $4.96
    The direction in which Chicago wheat futures prices "break
out" from the aforementioned trading range is likely to be the
next significant price trend in the market.
    The wheat bulls have been a bit encouraged by the recent
sideways trading range. However, prices are still technically in
an eight-month-old downtrend from the contract high of $12.84 1/4
that was scored in mid-March. A solid push in prices above the
last reaction high, which is also located at the November high of
$5.87 3/4, would negate the downtrend and also provide the bulls
with fresh upside near-term technical momentum.
    A downside breakout from the sideways trading range in
December wheat would produce fresh, serious chart damage to then
suggest a price move down to major psychological support at $4.00
a bushel.

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