Focus: Long-term Wheat Reversal
Grains are potentially on the verge of reversing the major declines which occurred in 2008. The best example is in wheat. Like the other grains, wheat dropped to three-year lows in late 2008. Now there are signs that wheat is rebounding off of long-term support. The daily chart of wheat shows a higher intermediate-term low which occurred in March. The higher low was consistent with a weak downtrend ADX peak (under 25). Price recently made a four-week high and crossed above the long-term trendline. Presently, the +DMI is above the –DMI, and this provides an opportunity for price to continue rising as long as +DMI strengthens.
If ADX rises above 25 while +DMI is above –DMI, a reversal could be underway.
Chart Courtesy of TradeStation.
Dr. Charles B. Schaap transitioned from health care to wealth care in the nineties. He is the author of ADXcellence —Power Trend Strategies and Invest with Success—Big Profits for Small Investors. Dr. Schaap is a commodity futures strategist and recognized authority in technical analysis of the financial markets. His website is www.adxcellence.com.
