March 11, 2009
CBOT wheat remains trapped in downtrend
Chicago Board of Trade May soft red winter wheat futures are still trapped below a two-month-old downtrend on the daily bar chart.
For the bulls to gain some fresh upside near-term technical momentum they will have to negate the aforementioned downtrend, which means pushing May futures prices back above the last "reaction high," which is located at US$5.44 3/4.
A close in May wheat futures prices below solid technical support at last week's low of US$4.98 1/2 would produce fresh near-term chart damage to suggest a challenge of the contract low of US$4.84 1/4, or below.
One early technical clue that does give the wheat market bulls a bit of encouragement is that the Moving Average Convergence Divergence indicator overlaid on the daily chart for March Chicago wheat has just produced a bullish line crossover signal, whereby the MACD line has crossed above the "trigger" line of the indicator.
The last time such a bullish line crossover signal occurred was in mid-December - at which time May wheat futures rally by over US$1.00 a bushel to the early January high.
