November 5, 2008
Chicago Board of Trade (CBOT) December wheat futures have recently seen a short-covering rally from the October low of US$4.96 1/2 a bushel.
Price action has recently penetrated on the upside and ignited a downtrend line drawn from the August and September highs.
Recent price action has also produced a bullish line crossover signal from the Moving Average Convergence Divergence technical indicator. The MACD line has crossed above the trigger line of the indicator, which is a bullish technical clue.
However, bulls still have more heavy lifting to do to more strongly suggest a near-term market low is in place, including pushing and closing December futures prices back above psychological resistance at US$6.00 a bushel. Under that level does lie solid technical resistance at last week's high of US$5.78 1/2.
Technical support for CBOT December wheat is located at US$5.50 and then at Monday's, 3 November 2008 low of US$5.32 3/4. Major psychological support for December wheat is located at US$5.00 a bushel. A close below strong technical support at the October low of US$4.96 1/2 would produce fresh, serious chart damage to suggest a price move to US$4.50, or below.