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Corn consolidating; soybeans testing resistance ceiling

11/25/2013 @ 7:38am

March CBOT corn futures closed little changed on Friday and on the weekly chart. However, a hammer bottom did form on the weekly candlestick chart, suggesting the $4.20 low is strong nearby support. Corn futures have been buffeted back and forth in recent days amid speculation over how corn demand will be affected by the EPA's proposal to lower the amount of ethanol that is required to be blended into gasoline.

Overall, the technical trend remains solidly bearish for corn. A minor low has formed with support at $4.20, but corrective rally moves have been shallow and short-lived in recent months. The 20-day moving average at $4.35 1/4 on Friday remains key near-term resistance. The bulls would need to climb above the 20-day moving average early in the week to suggest more significant strength is possible near term.

Daily momentum has worked off its recent oversold conditions and the 9-day relative strength index stood at 41% on Friday, up from 25% on Nov. 18.

A period of sideways consolidation could be seen near term between major support at $4.20 and resistance at $4.49 1/2, the Nov. 12 swing high. If a selloff were achieved under $4.20 it would open the door to a retest of psychological support at $4.00.

  • $6.70 -- the contract high
  • $4.32 3/4 - -the 10-day moving average
  • $4.35 1/4 - the 20-day moving average
  • $4.44 1/4 -- the 40-day moving average
  • $4.20 1/2 -- the contract low

MARCH CBOT WHEAT, combined pit and electronic trading

March CBOT wheat closed slightly higher on Friday, after a week of consolidative sideways action. Minor support lies at $6.52, last week's low, as the market hovers above major multimonth congestive support and the contract low at $6.47 3/4, hit on Sept. 12.

The longer-term trend remains bearish, but a strong floor has formed at the $6.47-6.52 region and that zone could be tough to crack without fresh fundamental news.

The market is recovering from deeply oversold levels following the steep selloff seen since late October. But despite rising momentum, rallies have been limited in March wheat. Resistance lies at $6.63 and then $6.70 1/2. The bulls would need to rally March wheat above that latter level to trigger a substantial corrective rally move.

  • $9.12 1/4 --the contract high
  • $6.55 1/2 -- the 10-day moving average
  • $6.65 3/4 -- the 20-day moving average
  • $6.83  -- the 40-day moving average
  • $6.47 3/4 -- the contract low

MARCH KC WHEAT, combined pit and electronic trading

March Kansas wheat bounced to a higher close Friday, but remained within recent ranges. The market hit a new contract low last week, which now stands as support at $6.94. The trend is bearish, but the market is vulnerable to a period of consolidation or correction following the steep and swift price decline in recent weeks. Initial resistance lies at $7.05 1/2 ahead of $7.10. Bearish targets under the contract low lie at $6.85 and $6.74, from the weekly continuation chart.

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