Chicago Board of Trade wheat futures (CBT.W) recorded its third consecutive loss on Thursday, dropping -1.4% to close the day at $7.76'4. Thursday's decline came on a gap down pattern, where the day's high was lower than the previous day's low price. Wheat futures are also trading at a 13-week low. After starting the month on a bearish note, will Chicago wheat continue to decline in May?
Q: How has Chicago wheat performed in the past when, while trading at a 13-week low, it gaps lower on the first day of a month?
A: According to the 7 previous occurrences of this event, EventEdge indicates that Chicago wheat has shown a very strong bearish edge that peaks 19 trading days after the event. Thus, the projected date for the peak of the bearish edge relative to the current event date (Thursday, May 1, 2008) is Thursday, May 29, 2008.
Chicago wheat declines in 100% of the cases (7 of 7) by an average of 5.1% relative to the close on the event date. Which, based on the close on the event date ($7.76'4), provides a target price of $7.36'7.
To see this idea in our EventEdge® analysis tool click here.
Ronish Patel is an analyst with MarketHistory.com.
