The Corn market is not as glamorous as Gold or Silver or the stock market, but the Corn charts indicate that a sizable move is just around the corner
Note: Due to travel this is likely my last post until Sunday, March 5 or Monday, March 6
The Corn charts are extremely compelling. The market is setting up for a $1 per bushel or so move. The question is: “In which direction?” This market is a strong candidate for my 2012 Best Dressed List. But, trading this market will require some flexibility.
The weekly chart shows a line of very stout support at $5.75. This support line has been repeatedly tested since last July. A decisive close above $6.66 would complete a 5-month trading range. Also note that the trend-default moving average has turned up and the ADX indicator is below 11, a level at which a sustained trend could occur.
There are several features on the daily chart of May Corn worthy of note:
- If we include the June high the chart displays a possible 11-month H&S top with an extended right shoulder. I must point out that H&S top patterns are not bearish until they are completed — and even then they can fail.
- The right shoulder of the larger H&S top itself is a possible 5-month H&S bottom pattern. I define this phenomenon as an “interlocking H&S.” The right shoulder of this pattern is extending.
- The ADX indicator has turned slightly higher after dipping below 10. ADX readings below 12 often precede sustained trends.
A decisive close above the Jan. high at $6.73 is required to complete this pattern. But, traders should also be alert for a H&S bottom failure. Cascading closes below the Feb. low, the Jan. low and then the Dec. low would all stack the deck for a bearish resolution in the Corn market.
There are only two other futures/forex markets I am concerned about during my current travels — Sugar ($SB_F) and $USDJPY.
Sugar is NOT ready to accelerate at this time. The upside breakout on Feb. 21 has lacked the type of follow through indicative of a pending moon shot. Nevertheless, I remain long with stops below the market. I have a trigger finger with my long position. Open interest has increased by 255,000 contracts or 55% since early October. Prices are are at October’s level. This is not encouraging, even though the CFTC COT data are somewhat constructive.
A bottom of some importance has been completed in $USDJPY. There are a cluster of targets from 83.50 to 85.20. A reaction to retest the late October high would represent an excellent buying opportunity.
Markets: $ZC_F, $SB_F, $USDJPY, $G6J_F