March 27, 2009

Soft red winter wheat futures at the Chicago Board of Trade have slumped this week to produce fresh near-term technical damage. The May futures contract this week has shed more than 40 cents in value as of Wednesday's (March 26) close.

The next downside price objective for the recharged wheat bears is to push and close May futures prices below strong technical support at the March low of US$4.98 1/2. A close below that level would produce more chart damage to suggest a price move to the contract low of US$4.84 1/4, which was scored in December.

The Moving Average Convergence Divergence indicator overlaid on the daily chart for May corn futures also show fresh bearish clues. The MACD line of the indicator is now poised to produce a bearish line crossover signal by moving below the "trigger" line of the indicator.

For the wheat market bulls to regain some fresh upside near-term technical momentum they would have to push and close May futures prices back above solid overhead technical resistance at this week's high of US$5.63.

Near-term chart support for May wheat futures is located at the overnight electronic low of US$5.10, at Wednesday's low of US$5.06 3/4, at $5.00 and then at US$4.98 1/2. Technical resistance is located at the overnight high of US$5.18, at US$5.25 and then at US$5.30.