May soft red winter wheat futures at the Chicago Board of Trade are still trapped below a two-month-old downtrend on the daily bar chart. For the bulls to gain some fresh upside near-term technical momentum they will have to negate the aforementioned downtrend, which means pushing May futures prices back above the last “reaction high,” which is located at $5.44 3/4. A close in May wheat futures prices below solid technical support at last week’s low of $4.98 1/2 would produce fresh near-term chart damage to suggest a challenge of the contract low of $4.84 1/4, or below.
click on the chart to enlarge
One early technical clue that does give the wheat market bulls a bit of encouragement is that the Moving Average Convergence Divergence (MACD) indicator overlaid on the daily chart for March Chicago wheat has just produced a bullish line crossover signal, whereby the MACD line has crossed above the “trigger” line of the indicator. The last time such a bullish line crossover signal occurred was in mid-December–at which time May wheat futures did proceed to rally by over $1.00 a bushel to the early January high.–Stay tuned!–Jim Wyckoff
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