September 5, 2008

December corn futures on the CBOT have been trending lower from the August high of US$6.28 3/4 and on Wednesday (September 3) hit a fresh two-week low of US$5.50 a bushel.

Bulls have faded recently, and the bears have some fresh downside technical momentum on their side.

A close below solid technical support at this week's low of US$5.50 in December corn would produce significant chart damage to suggest a challenge of strong technical support at the August low of US$5.04 1/2. Below that price level lies strong psychological support at US$5 a bushel.

The Moving Average Convergence Divergence indicator overlaid on the daily bar chart for December corn futures shows that a bearish line crossover signal has just occurred, whereby the MACD line crossed below the "trigger" line of the indicator. The last MACD line crossover on the daily chart for December corn occurred on June 30. December corn prices then proceed to trade from the June 30 high of US$7.93 to the August low of US$5.04 1/2.

For the corn bulls to regain some fresh upside near-term technical momentum they would have to push December corn prices back above solid technical resistance at US$5.80 3/4, which would fill on the upside a rare downside price gap on the daily bar chart that occurred on Tuesday, based on the electronic trading chart for December corn.