Wheat Makes a New 2-Month Low
December Wheat futures (WZ7) hit a new 2-month low today with a closing price of 762. This is part of a downtrend that started at the end of September when the high was established at 961. Since then, there has been a classic trend to the downside. There was a little bit of congestion at the 800 mark last week which could have acted as a support line. However, after being penetrated to the upside briefly, it wound up acting as a general point of resistance. On the chart you will notice that the sellers came in yesterday when the 810 mark came onto their screens at the open. At that point, the bears took control and never gave it up.
Looking at the moving averages, we see that the prices are below both the 15- and 25-day MAs. Although not terribly far below, it still shows that the market is moving fairly quickly. What is interesting is that the fast stochastic indicator is approaching the low end of the spectrum. If that is an indication of an upcoming reversal, it will happen without the support of the chart. The nearest level of support is in August at around the 725 mark. With almost 40 points of wiggle room, the bulls will have to do a little dancing on air to make a turnaround from this level.
In other news, Crude Oil couldn’t quite make it over the $100 mark today, closing at 95.31 after getting as high as 97.69. With the relationship of Oil to the Dollar, it will be interesting to see how the Fed reacts to spiraling prices in the petroleum sector.
Mike Tosaw, Director of Education
