Is wheat is telling us it's at a major bottom?

March 9, 2016 03:13 PM

Wheat’s last bear market ended in 2009 with a final blow off to the downside in 2010. Both times it definitely did not like staying under 450. It would quickly recover back over that price level the same month. We are seeing that same similarity again this year. But it doesn’t end there.

This month wheat sold off to 442 1/4, and, just as quickly, got right back over 450. That’s exactly what it did in June 2010 when the blow off pushed wheat even further down to 425 1/2. That same month it immediately went back over 450 to start a strong bull move. So seeing the same behavior again, even though not as extreme, is worthy of my attention. What is interesting is that when wheat bottomed in 2010, once it got over the 20 average on its weekly chart everything changed. It then took off and rallied 3.05 points without looking back. So right now the 20 average on its weekly chart to me could be very important. Currently, it intersects at 479. In 2010 it intersected at 478 1/2. Concidence or what?

And what is even more coincidental is that even on its daily chart wheat’s trading pattern appears the same as in 2010 when it bottomed and at the same price level. In 2010 it rallied over both the 20 & 10 avg. but backed off from 470. It is doing the same thing currently. It’s already over both the 20 & 10 average and this week’s high was 468 1/2 before backing off. Close enough. In 2010 it tested that 470 area several times before selling off. But that selloff held the contract low and it was that correction that should have been bought because it then turned around and took out that 470 resistance on its daily chart and subsequently the 20 average on the weekly. Over 3.00 points later the wheat rally finally stopped.

I think it strange that not only is wheat reacting the same in terms of a level it wants to stay over long term--just as it did in 2010. But also it is trading not only the exact same way on its charts but also at the exact same price area this time around.

Is this just a coincidence or is wheat trying to tell us it is forming a major bottom?

About the Author

Judy Crawford is a senior broker at Zaner Group. Raised in rural Minnesota, Judy went to the University of Minnesota and received a BA Degree in language. She specializes in technical analysis of the markets and write a market commentary entitled “Market Update” that is available to readers via e-mail. Sign up at her website: