The Corn futures market (CBT.C) recorded its fourth successive daily loss on Thursday after the Independence Day holiday last Friday, dropping 1.1% to close at $6.75’2 per bushel. This recent bearishness has also resulted in CBT.C to close below its lower Bollinger band (20-day, 2 standard deviation bandwidth) for the third time in a row on Thursday. The good news for CBT.C is that, though it is below its 5, 10, and 20-day moving averages, it remains above its 50, 100, and 200-day averages. Will CBT.C finish this bearish week off with a rally on Friday?
Note that the latest Commitment of Traders report, released every Monday, states that Small Traders in the market are net short of future contracts.
We will look at two different events that predict a rally for Friday.
Q 1: First, how has CBT.C performed in the past when, while trading below its 200-day moving average, it closes below its lower Bollinger band for the second consecutive time on Thursday?
Q2: How has CBT.C performed in the past when it records four successive declines after any holiday while Small Traders are net short of contracts?
A: In both cases, CBT.C shows a strong edge that peaks one trading day later and rallies 100% of the time.
First case, according to the 10 previous occurrences of the event, CBT.C rallies by an average of 0.9%, providing a target price of $6.81’4.
Second case, according to the five previous occurrences of the event, CBT.C rallies by an average of 0.7%, providing a target price of $6.79’6.
To view these two ideas in our EventEdge® analysis tool click either 1st Graph or 2nd Graph.
Ronish Patel is an analyst with MarketHistory.com.
