We have decided to show the CBOT Wheat continuation chart and this is the first time on chart of the day that we have posted an agricultural contract. The last year has seen an incredible rise with some violent swings of late which is almost always associated with tops and bottoms. The sell off we have seen since the middle of March is now seeing closes below the 38.2 Fibonacci Retracement of the move up that began back in April last year and we are sitting just above trend support.
Indicators in Play
Fibonacci Retracement levels are a good gauge as to the weakening or end of a Trend. If a market retraces further than the 38.2 point of a move, buying dips could be costly.
Trend Support Lines are probably the most basic and easy to understand tools in Technical Analysis. It’s just a matter of joining higher lows together with two and some prefer three points of contact. Even these simple lines do have conditions that affect their strength. The more points of contact and the longer the line has held true increases the potency of the line.
Summary
We are watching this one closely as a failure to hold trend support spells more pain for the Bulls. If they can hold above this line which comes in at 951.40 today, they may still have a chance of getting back above the Fib at 102.54. We are on the fence here at the moment but its worth watching.
David has been
analyzing and trading the worlds financial markets for the past 25 years. After an initial grounding with Mercury Asset Management and Warburg Securities he went on to set up his own brokerage operation in London. Since then he has appeared regularly on Bloomberg Television and been involved in providing analytics on behalf of some of the worlds major exchanges. He is also a member of the Society of Technical Analysts.
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