uly lumber futures at the Chicago Mercantile Exchange on Tuesday gapped higher on the daily bar chart and hit a fresh four-week high of $256.40. Recent price action has also penetrated on the upside and negated a downtrend line drawn off the January high of $321.00. Bulls are now encouraged that a major market low could finally be in place. However, veteran lumber market traders know the higher volatility that lumber futures tend to exhibit. Bulls would gain better confidence that a major market low is in place in the lumber futures market by seeing the July contract produce multiple closes above stiff overhead technical resistance at $260.00.
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Bears’ next downside technical objective is to produce a close in July lumber futures below the recent contract low of $240.70. Veteran lumber futures traders also know that once new price trends do get kicked off in the market, they tend to be steep price trends. A look at the longer-term monthly continuation chart for nearby lumber futures shows that over the past 25 years, there have been many V-top and V-bottom reversal patterns formed.
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