Focus: Key Test of Support for Wheat
Wheat prices began to rise in late April, and broke out of a low-ADX rectangle pattern in early May. Prices then climbed steadily to set a 20-week high of $6.77 on the first of June. Since then, wheat prices have retreated. Last week, July wheat fell 39.25¢ to close at $5.84 3/4. Price is now making a key test of support (old resistance) at $5.75. It is important to note that the 20-week high was made on a very strong ADX peak of 40, while the test of support appears relatively weak with a current ADX of under 25. If ADX remains weak on the swing down, it suggests that wheat is likely to find support and begin a new leg upward (or move sideways).
Chart Courtesy of TradeStation
Dr. Charles B. Schaap 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.
