November 20, 2008
Chicago Board of Trade wheat futures have been trading in a sideways range at lower price levels since mid-October. The trading range is bound by solid overhead technical resistance at the November high of US$5.87 3/4 a bushel and by solid technical support at the October low of US$4.96 1/2.
The direction in which CBOT wheat futures prices break out from the aforementioned trading range is likely to be the next significant price trend in the market.
The wheat bulls have been a bit encouraged by the recent sideways trading range. However, prices are still technically in an 8-month-old downtrend from the contract high of US$12.84 1/4 that was scored in mid-March. A solid push in prices above the last reaction high, which is also located at the November high of US$5.87 3/4, would negate the downtrend and also provide the bulls with fresh upside near-term technical momentum.
A downside breakout from the sideways trading range in December wheat would produce fresh, serious chart damage to then suggest a price move down to major psychological support at US$4.00 a bushel.