March corn futures at the Chicago Board of Trade late last week produced a bearish downside "breakout" from a five-week-old sideways trading range on the daily bar chart. Prices notched a fresh contract low of $3.52 1/4 on Friday.
Despite a short-covering bounce on Monday, serious near-term technical damage has been inflicted in the corn market and the bears have the solid near-term technical advantage. The next major downside price objective for the corn bears is the $3.25 level in March futures.
For the corn bulls to regain upside near-term technical momentum they will have to produce a close back above strong psychological resistance at $4.00 a bushel, basis March futures.
Near-term technical support for March corn is located at the contract low of $3.52 1/4 and then at $3.50. Resistance is located at $3.70 and then at $3.75.
From a longer-term technical perspective, nearby corn futures prices have produced a big V-Top reversal pattern during the past 12 months, as prices have hit a fresh 14-month low. The next longer-term downside target for the bears is the July 2007 low of $3.08 1/2.
Importantly, look for corn and the rest of the grain futures to closely monitor and follow the key "outside markets"--crude oil, the value of the U.S. dollar and the U.S. stock indexes. On days when crude oil and the U.S. equities are higher and the greenback is weaker, look for stronger corn futures prices. On days when crude oil and equities are weaker and the dollar is stronger, look for corn futures to see selling pressure.