Overnight e-CBOT trading suggested the grain futures would open solidly lower Wednesday. More importantly is how the markets close. Recent history has seen the grain market bulls step in to buy corrective pullbacks in the grains–especially in corn and soybean futures. Heading into the end of the month and the end of the year, it is not at all surprising to see profit-taking pressure in the grain futures develop, after recent solid bull runs that have produced contract highs in corn and soybean futures just recently.
Solidly lower closes in corn and soybean futures on Wednesday would begin to worry the bulls just a bit. Recent price action has seen mild corrective price pullbacks in corn and soybeans as buying opportunities for the bulls. This suggested weaker openings on Wednesday morning would be met–likely before noon CST–with a fresh wave of speculative buying interest to drive prices back above unchanged. However, if grain futures are still under solid selling pressure by noontime, then that selling pressure could intensify heading into the close, as traders wonder if a larger-degree price correction is under way that could last several trading sessions, or longer.
The key technical support level for the corn bulls to defend is $3.47 1/2 in March futures.
click on the chart to enlarge
That is the bottom of a big upside price gap that occurred on the daily bar chart on Nov. 2. Filling that gap on the downside would produce some near-term technical damage to suggest a market top could be in place. Before that level is reached there does lie solid chart support at $3.70, at $3.60 and then at $3.55, basis March corn futures. For January soybeans, the bulls need to defend solid chart support at $6.50 a bushel. A close below that level would begin to produce some significant near-term chart damage. Above that key level does lie chart support at $6.70 and then at $6.60, basis January futures.
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