Wheat continued to struggle through most of last week ending on a soft note, perched perilously above a key support area that has been in play since December last year. A move below 866 would mean more tough times ahead although there are a number of lows just after that time making it an important support area. Early trade today is seeing the Bulls make a stand but they need to hold on to these gains for the close and then tackle the change in polarity principle.
Indicators in Play
The Change in Polarity Principlesounds rather grand and impressive but it really is quite simple. When a market has been obeying a Trend line for some time and then eventually breaks, this line turns from friend into foe. In this case we have been bouncing off a support line that having been breached is now acting as resistance and comes in today at 966.6.
Summary
If the Bulls want to put the breaks on here, now is the time to act. There is an argument to take some profit here in the short term but a breach of 866 would mean the sell button needs to get warm again. If there is any sort of decent bounce, longer term the play is still to sell strength.
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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