December 3, 2009

Technical Special: Price uptrend in CBOT wheat still in place

March soft red winter wheat futures are presently in a choppy, two-month-old uptrend on the daily bar chart.

According to Jim Wyckoff of Dow Jones, stiff technical resistance, however, lies overhead at the November high of US$6.04 3/4 a bushel.

A close above that key technical resistance level would provide the wheat market bulls with fresh upside near-term technical momentum to then suggest a challenge of major psychological resistance of US$7.00 a bushel.

A close in Chicago Board of Trade March wheat below solid technical support at last week's low of US$5.52, which is also the last "reaction low" in the uptrend on the daily chart, would negate the uptrend, dent the bullish enthusiasm and begin to suggest that a near-term market top is in place.

Importantly, the wheat futures market has been heavily influenced recently by the key "outside markets" that include the US dollar index, crude oil prices and US stock index futures prices. As long as the dollar index continues to trend lower while crude oil and stock index futures trend higher, the path of least resistance in wheat futures will remain sideways to higher.