October 8, 2008

CBOT corn in strong downtrend; now oversold
  
 
Chicago Board of Trade December corn futures are mired in a 3 1/2-month-old downtrend on the daily bar chart and on Tuesday (October 7) hit a fresh 12-month low of US$4.16 1/2 a bushel.

The bears are in firm technical command of the corn market after having pushed prices below several key technical support levels recently, including below what was major psychological support at US$5.00 a bushel.

Indeed, corn futures prices have dropped nearly 50 percent from the late-June contract and all-time high of US$7.99 1/4, basis December futures.

The next downside price objective for the corn market bears is to push and close December futures prices below major psychological support at US$4.00.

The corn-market bulls can correctly argue that December futures prices are now short-term oversold, technically, and due for at least a corrective upside bounce very soon.

The 14-period Relative Strength Index overlaid on the daily bar chart for December corn shows a reading of 23.63. Any RSI reading below 30.00 suggests a market is overdone on the downside and due for a corrective rebound soon.

Also, the last time the RSI line on the daily chart moved into oversold territory was in August, at which time December corn futures experienced a solid corrective bounce of more than US$1.00 a bushel.