March 11, 2010

CBOT wheat futures hit fresh five-week low

May wheat futures on the CBOT Wednesday (March 10) hit a fresh five-week low of US$4.83 a bushel, stopping just short of strong technical support at the February low of US$4.80 3/4.

After traders digested a bearish monthly USDA supply-and-demand report for wheat, prices did move off the session low and did poke above unchanged.

If May Chicago wheat futures can produce a close near the session high; that would be one very early bullish technical clue that a market low is in place. When a market cannot sustain downside price action following fresh bearish fundamental news, such as Wednesday morning's USDA data, then that is a clue that all the bearish fundamental news has been factored into the market's price structure and that the bears have become exhausted at lower price levels.

Also, if May Chicago wheat futures do rally from present price levels, then a bullish double-bottom reversal pattern could be forming on the daily bar chart.

However, wheat market bears do still possess the overall technical advantage and bulls have much more work to do to suggest a price uptrend can be sustained. May wheat is presently still trading below a downtrend line on the daily bar chart, drawn from the November, December and January lows.
 

Technical resistance for May Chicago wheat is located at Wednesday's high of US$4.93, at US$5.00 and then at US$5.10. Technical support is located at Wednesday's low of US$4.83 and then at the February low of US$4.80 3/4.