Focus: 30-minute Wheat Reversal
Two weeks ago, I reported that the grains were “potentially on the verge of reversing the major declines which occurred in 2008.” Since then, grain prices have strengthened. Wheat was boosted by weather concerns, as well as last week’s USDA report which predicted a 7% decline in wheat acreage. Technically, long-term reversals must start on lower timeframes: first, the 30-minute chart of wheat shows a classic trend reversal. Over the past 10 days, wheat prices formed an orderly cup pattern, reversing direction from down to up. The downtrend created a bearish -ADX wave followed by a bullish +ADX wave. The bulls took control when the +DMI (green) crossed up and traded places with the –DMI (red). Last week, wheat made a new 10-day high. Expect a pullback to test support at the 20-day SMA, followed by another price surge upward which may extend the 30-minute reversal into the daily timeframe.
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.
