Corn, Dollar Index and a potential spearhead model in SP500.

Corn, Dollar Index and a potential spearhead model in SP500.


Let's start this week's piece with Corn (Corn futures). On the chart below, the red line is showing the commitment of traders data for the so-called small speculators. It indicates that their buying reached an extreme. They haven't been that bullish since... well for as long as I can see on my chart. That is bearish for Corn.

Corn analysis 09/22/2019

On the other hand, Commercials'buying (the blue line) didn't reach a level which can be considered as a very bullish.

Here we should mention the lack of accumulation and a seasonal pattern showing more weakness to come. I think there is more room to the downside for Corn. We should see at least one more push to the south.

The working range right now is 338 – 382. With the current (last closing) price of 370 6/8, there is a good risk/reward but… I can't see an entry signal at the moment. The 382 level acts as a magnet for the price so it can go there. 

I will look for a composite signal here like having an inside up bar on Monday. If the market doesn't present a good price action short at this level, I'll wait for a momentum trade below 365. 


I like what I see in Dollar Index. The seasonal pattern suggests that a period of US Dollar's weakness should start right here, right now (red arrow). At the same time On Balance Volume shows that this market is under distribution. See the chart below. The Dollar index (futures) is in a tight trading range while the On Balance Volume (green line) is making new lows. 

US Dollar Index analysis 09/22/2019

All this makes me look for an entry with first target around 97.22 and a second one around 96.60. 

We can trade a general Dollar weakness with some other currencies. The first choice is always the Euro. One can also consider the Cable and the Loonie in the current situation. Just have in mind that the clearest setup is in the Dollar Index.


Still expecting to see new all-time highs and still looking for long signals. 

Speaking of such if on Monday S&P500 E-minis breaks above the Friday's high the market will create a spearhead pattern. That will be a strong bullish signal which I am planning to take. If you are not familiar with this pattern and how to use it it is not advisable to trade it. You should also consider the level where it appears (close to the all-time high) and the fact that it is a pure technical signal based on Relative Strenght Index (RSI). You can learn about this pattern by subscribing below.

Now, let's find your missing piece!

Vassil Banov,
Founder of Piece of Trading

Trades mentioned here are either taken or will be taken by the author if the right conditions appear. They are NOT recommendations nor any of this constitute investment advice. Please read the Risk Disclaimer

Seasonal indicators courtesy of Larry Williams, Charts made with TradeStation®.

TAGS: RSI, Relative Strength Index, S&P500, SPY, SPX, COT, Commitments of Traders, British pound, Canadian Dollar, Corn, Dollar Index, Futures

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