September 26, 2008

December CBOT corn trapped in trading range

December corn futures at the Chicago Board of Trade are presently trapped in a four-week-old trading range, bound by solid technical resistance at US$5.80 3/4, which is the top of a downside price gap on the daily bar chart that was created in late August.

There is also solid technical resistance located at the September high of US$5.79 3/4. On the downside of the trading range, solid technical support is located at the September low of US$5.24 a bushel.

The direction in which December corn futures prices "break out" of the aforementioned trading range is likely to be the next significant near-term price trend of the market. A downside breakout from the trading range would produce fresh chart damage to suggest a challenge of major psychological support at US$5.00 a bushel, or below.

An upside breakout from the four-week-old trading range in December corn futures would provide the bulls with fresh upside technical momentum and open the door to a challenge of major psychological resistance at US$6.00 a bushel or even solid technical resistance at the August high of US$6.28 3/4.

Corn and other grain futures markets will continue to be heavily influenced by the key "outside markets" - crude oil and the value of the US dollar versus the other major currencies. A combination of lower crude oil prices and a firmer US dollar is bearish for the grains, while higher crude and a weaker greenback are bullish for the grains.