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Technical bears target $4 corn

11/19/2013 @ 7:39am

March CBOT corn futures plummeted to a contract low on Monday. The losses marked the fifth session in a row of declines. Corn remains under pressure following last week's news that the Environmental Protection Agency has proposed a reduction to the amount of ethanol that would be required to be blended into gasoline. U.S. ethanol is made from corn and the proposal could decrease demand for the grain.

On the daily chart, the trend across all time frames is bearish. However, after five days of selling pressure, corn is overextended and oversold. The market is vulnerable to a consolidation or upward correction at any time. The market pushed under the lower daily Bollinger band line on Monday and the 9-day relative strength index (RSI) hit 25%, which is considered to be an oversold reading.

On the upside, the Nov. 8 swing low at $4.26 3/4 is now resistance.

On the downside, a target for the bears lies at $4.00.

$6.70 -- the contract high 
$4.35 1/2 - -the 10-day moving avearage 
$4.40 1/4 - the 20-day moving average 
$4.48 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 pressed to slightly lower levels on Monday, pressured by the weakness in the corn market as the two grains compete as a source for animal feed.

On the daily chart, March wheat posted a bearish outside day. The bears remain in charge. The near term trend is bearish and the long term trend is bearish. But, the market has fallen to a zone of major long-term chart support, which includes congestion in the $6.55-6.47 region. That floor could be tough to crack.

Initial resistance lies at $6.60 1/4.

$9.12 1/4 --the contract high 
$6.58 1/2 -- the 10-day moving average 
$6.76 -- the 20-day moving average 
$6.85 1/2 -- the 40-day moving average 
$6.47 3/4 -- the contract low

MARCH KC WHEAT, combined pit and electronic trading

March Kansas wheat pushed lower Monday as the market continues its recent and relentless downtrend. The market is within striking distance of a major bearish target at $6.94 1/4, the contract low hit in mid-September. That level could offer support for the contract near term. Daily momentum is at oversold levels, which leaves the market vulnerable to a pause in the downtrend. Resistance lies at $7.10.

$9.50 3/4 - - the contract high 
$7.08 3/4 -- the 10-day moving average 
$7.30 1/4 -- the 20-day moving average 
$7.38 3/4 -- the 40-day moving average 
$6.94 1/4 -- the contract low

-Write to Kira Brecht at copydesk@dowjones.com

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(END) Dow Jones Newswires

November 19, 2013 08:00 ET (13:00 GMT)

DJ Corn Hits New Contract Low, Oversold - Technical Analysis->copyright

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