December corn futures at the Chicago Board of Trade have this week seen a bearish downside "breakout" from a choppy and sideways trading range at higher price levels, including a big are rare gap-lower price move on the daily chart that occurred Tuesday.
Now the corn bulls are trying to defend near-term technical support that is located at this week's low of $7.02 in December corn. A close below that key price level and a close below major psychological support at $7.00 a bushel would produce more near-term chart damage to then begin to suggest that a near-term market top is in place.
Importantly, Friday's closing price level in December corn futures will be critical for price action in the near term. History shows that the week after the Fourth of July holiday has proven to be many times a critical week, whereby existing price trends can accelerate or be stopped in their tracks. So far this week, the latter has been the case in the corn futures market.
For the corn market bulls to begin to regain some solid upside near-term technical momentum they will have to push December futures prices above solid chart resistance at $7.47, which is the top of Tuesday's big downside price gap on the daily bar chart.
From a Fibonacci technical perspective, the important 50% retracement level of the price move from the May 29 low of $5.99 3/4 to the contract high of $7.99 1/4 comes in at $6.99. A close below that level would also be significantly bearish from a Fibonacci perspective.
It's important to point out that while technical points and chart analysis are indeed important market components for all traders to continually monitor, it's this time of year in corn and soybean futures markets that an updated and unexpectedly shifting weather forecast for the Corn Belt can and will trump all technical analysis. In other words, while the near-term technicals this week have fully favored the corn bears, all it would take is a weather forecast for hotter and drier conditions in the Corn Belt to spike the corn market back north. Stay tuned--Jim
(FYI, if you'd like to know more about me, my job, my hobbies and my family, check out my website at www.jimwyckoff.com