Wesley Chapel, Florida, January 19, 2009 — March wheat futures at the Chicago Board of Trade (ZW H9) last Friday posted a bullish weekly high close. However, the bears do still have the overall near-term technical advantage. The bears are pointing out the “February Break” phenomenon is likely to occur in the coming weeks. The February Break seasonal event occurs nearly every year, whereby grain futures prices experience significant price weakness during or shortly before or after the month of February.
The next downside price objective for the wheat bears is pushing and closing March futures prices below solid technical support at last week’s low of $5.60 1/2. Bulls’ next upside price objective is to push and close March futures prices above solid technical resistance at the January high of $6.46 1/4 a bushel.
Bearish “outside markets” recently–lower crude oil prices and a firmer U.S. dollar–have helped to put downside price pressure on the wheat futures market. These key outside markets will continue to have a major influence on the price of wheat. This is another example of the importance of “Intermarket Analysis,” which was pioneered by veteran trader/analyst and software developer Lou Mendelsohn.
From an important Intermarket analysis perspective provided by VantagePoint Intermarket Analysis software (www.TraderTech.com), there are also bearish early technical clues to suggest more selling pressure in wheat futures in the near term.
Source: VantagePoint Intermarket Analysis Software
VantagePoint is a valuable trading tool for which a trader can glean clues on potential near-term price trend changes or continuation of present trends. These near-term clues provided by VantagePoint can and do give a trader a key edge.
See on the VantagePoint daily bar chart for March wheat futures that the Predicted Medium Term Crossover study shows the blue predicted 4 day exponential moving average has crossed and is trading below the actual black 10 day simple moving average close, which is a near-term bearish signal.
The Predicted Medium Term Crossover is the predicted 4 day exponential moving average of typical prices two days ahead (P4EMA+2) crosses above or below the actual 10 day simple moving average close (A10SMA).
Also note at the bottom of the daily chart for March wheat futures that the Predicted Moving Average Convergence Divergence (PMACD) indicator is also in a bearish posture, as the thick black PMACD line is trading below the predicted blue “trigger” line.
Predicted MACD is another way of using moving averages to predict market changes. Predicted MACD charts the difference between two predicted exponential moving averages and uses another exponential moving average of the MACD as a trigger for trading signals.
Predicted MACD (PMACD) predicts the moving average convergence divergence (MACD) one day ahead. MACD is a trend-following momentum indicator calculated by subtracting a 20-day exponential moving average from a 10-day exponential moving average. MACD Trigger (Trigger) predicts the MACD trigger one day ahead. The MACD trigger is calculated as a 9-day exponential moving average of the MACD.
When the Predicted MACD line crosses below the Trigger line, this predicts a possible reversal of the current uptrend to a new downtrend. When the Predicted MACD line crosses above the Trigger line, this predicts a possible reversal of the current downtrend to a new uptrend. Another crossover indicator occurs when the Predicted MACD crosses above or below the zero line.
Predicted MACD can also be used as an overbought/oversold detector when it pulls away from the Trigger, suggesting the price of the market may be due for a correction that will bring the averages back together. Predicted MACD can also be used to spot underlying strength or weakness when its movement diverges from the movement of prices.
To see more FREE recent market predictions for wheat go here!
