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Technical trends favor corn price

02/26/2014 @ 7:54am

May CBOT corn futures edged slightly higher Tuesday, boosted by speculation that the high price of soybeans could see U.S. growers shift acreage toward soybeans over corn this spring.

Technically, the near-term trend is bullish. The bulls are looking at a retest of the $4.63 high hit Feb. 21. Gains through that ceiling would open the door to $4.68 1/2, the mid-October swing high.

The moving-average picture is bullish, as May corn is trading above the 20-day, 40-day and 100-day moving averages. However, the longer-term trend remains bearish for corn, with the 200-day moving average looming overhead at $4.81 3/4, as resistance.

Daily momentum has reached overbought levels, which could open the door for short-term consolidation. Initial support lies at $4.52. Declines under that floor would be a weak signal and could open the door to a downside correction.

$6.76 1/2 -- the contract high 
   $4.54 1/2 -- the 10-day moving average 
   $4.49     -- the 20-day moving average 
   $4.41 1/4 -- the 40-day moving average 
   $4.14 1/2 -- the contract low 
MAY CBOT WHEAT, combined pit and electronic trading

May CBOT wheat settled with a marginal gain Tuesday but well off session lows. The near-term uptrend remains intact. However, the market continues to test resistance around the $6.17-$6.20 zone. That area includes the early-January swing high, which is an important chart resistance point. A "V" bottom pattern is seen on the daily chart, but the bulls need to conquer $6.17-$6.20 to unleash a fresh bullish wave. Beyond that area, the 100-day moving average will act as resistance and a bullish target at $6.38 1/4.

Daily momentum indicators, including the nine-day relative strength index and slow stochastics show the market at overbought levels. Initial support lies at $6.00 1/2, the Feb. 24 low. If that floor gives way, it would show a correction is setting in. The longer-term bear trend remains intact for now.

$8.98     -- the contract high 
   $6.04     -- the 10-day moving average 
   $5.88 1/2 -- the 20-day moving average 
   $5.88 1/2 -- the 40-day moving average 
   $5.53 1/2 -- the contract low 
MAY KC WHEAT, combined pit and electronic trading

May Kansas wheat moved sharply higher Tuesday. The bulls are targeting a test of $7.00 1/4. The near- and medium-term technical trends are bullish. The $6.69 3/4 level is now important recent swing-low support. If that zone were to give way, it would be a bearish short-term signal and would suggest the beginning of a correction.

$9.40     -- the contract high 
   $6.73 1/2 -- the 10-day moving average 
   $6.50     -- the 20-day moving average 
   $6.40 1/2 -- the 40-day moving average 
   $6.05     -- the contract low

Write to Kira Brecht at copydesk@dowjones.com

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(END) Dow Jones Newswires

February 26, 2014 08:00 ET (13:00 GMT)

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