It seems that the grain complex has a lot to offer for the upcoming week. Most of the instruments here are setup for an upside move. I will show two of them which I think, offer the most interesting situations.
This is one of the most beautiful charts I have ever drawn since I am doing this blog. If this was an indicator of an upcoming move than this time the up move in Corn should be gigantic :)
Here is that beautiful chart.
This is one of the rare occasions when COT data is showing both swing and short-term buys. Such extreme net short positions for the Large Speculators means they have a lot of closing to do. Also, as you can see from the indicator pane below the chart the biggest part of that selling led to nowhere. The market started to create higher short-term lows.
Those higher lows are coming right before a very strong period for Corn seasonally speaking (blue line). It starts this week. And the indicator (green line) is stronger than the chart which means accumulation.
Now the price action comes in. The ultimate low is formed by the largest down range (Highlighted in yellow) in the whole move. Then, the next higher short-term low comes with a volume spike. The third higher short-term low is a complex one with many points of re-accumulation.
The short-term buy was given when the 0T2xN bar broke above the 0TLB bar (see the blue line in zoomed bars in the rectangle). But since we have a swing setup as well we can expect the move to continue.
Monday should begin with a move towards the last day's high (1xN). If that high is broken with above 70% probability we'll see higher prices. Breaking above its low would mean the need of another re-accumulation and it could lead to a long signal.
The situation in Wheat is similar. See the chart below.
Commercials are increasing their net longs. OBV is showing accumulation. And all this comes right before we enter a seasonally strong period (blue line).
Wheat was suggested as long in the previous blog post. Since then, with no buy signal, the price made a new low then quickly rebound. Now we have a two, two-candlestick combinations with an inside day. What intrigues me is the second one which is a double Long Nose. This combination can lead to a large range day. And if on Monday the price break above the last day high this big day will most probably be to the upside. In any case, I'll prefer long signals here.
Comparing the setups between Wheat and Corn the major difference is that the setup in Wheat is not coming after a huge downtrend like the one in Corn.
Both CAD and AUD have similar setups. In both Thursday is an up outside day. Friday starts with No Tail but can't make a huge move. In AUD this 0T is also a Long Nose while in CAD he 0T is a Long Body. If the Thursday's close is reached on Monday that would make a lower short-term high and will signal for a possible move down.
Comparing them the Canadian Dollar looks weaker. This is where the shorts might become better.
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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, ireallytrade.com. Charts made with TradeStation®. tradestation.com
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