February 3, 2009
Technical Special: CBOT wheat bears have chart advantage
Chicago Board of Trade March wheat futures on Friday (January 30) closed a bearish weekly low close as prices are in a four-week-old downtrend from the January high of US$6.46 1/4 a bushel.
Bears have gained confidence heading into the month of February, especially as the seasonal "February break" phenomenon looms over grain futures prices.
A close in March wheat futures below strong technical support at the January low of US$5.48 1/4 would provide the wheat bears better downside near-term technical strength to suggest a challenge of major psychological support at US$5.00 a bushel, or below.
It would take a close in CBOT March wheat futures above major psychological resistance at US$6.00 to provide the bulls with some fresh upside technical momentum to suggest prices can work sideways to higher in the near term. Below that level is located support at US$5.80 and US$5.90.
Importantly, wheat traders will continue to closely monitor the key outside markets that include crude oil, gold and the value of the US dollar versus the other major currencies. To start this week, those outside markets are in a bearish posture for wheat and the grains, as crude oil and gold prices are weaker and the US dollar is steady to firmer.
