June 26, 2009

Chicago Board of Trade soft red winter wheat futures have been trending solidly lower for nearly four weeks.

December futures have shed more than US$1.25 a bushel from the June 1 high of US$7.25 1/4. During this period, December wheat has fallen below major psychological support levels that were located at US$7.00 and at US$6.00. Prices on Thursday (June 25) hit a fresh seven-week low of US$5.88.

The wheat-market bears have gained the strong near-term technical advantage. A big V-top reversal pattern has developed and is playing out on the daily bar chart for CBOT December wheat. Below the market is solid technical support at US$5.80. Below that price level lies chart support at US$5.75, at then at the April low of US$5.63.

Technical resistance is located at Thursday's high of US$5.94 1/2 in CBOT December wheat. Above that lies psychological resistance at US$6.00. Then comes chart resistance at this week's high of US$6.11 1/4. Strong technical resistance is located at US$6.30.

The shorter-term moving averages are in a bearish mode for December wheat. The nine-day moving average is well below the 18-day moving average. Also, December wheat is trading well below the key longer-term 40-day moving average that professional and fund traders track very closely. One early technical clue that the downtrend in wheat futures prices has run its course would be if the shorter-term moving averages produced a bullish line crossover signal, whereby the nine-day crossed back above the 18-day moving average.