Wheat (Globally) Reinforcing Major Base/Reversal Environments

March 13, 2018 9:28AM CDT

MAY MINN WHEAT
While 09-Mar's relapse negated our specific buy recommendation 28-Feb, we also discussed in that day's Technical Blog the prospect of a broader base/reversal count that remained intact until and unless the market broke 27-Feb's 6.08 low and key risk parameter. We also identified 08-Mar's 6.25 high as the smaller-degree corrective high and short-term risk parameter the market needed to stay below to maintain a more immediate bearish count.

The market's overnight recovery above this level (that we presume will be maintained during today's primary session) mitigates a broader bearish count and contributes to a base/reversal-threat that we believe could be major in scope. As a direct result of yesterday and overnight's rebound we believe that Fri's 6.13 low COMPLETED the (B- or 2nd-Wave) correction to the initial counter-trend rally from 6.08 to 6.36 ahead of a resumption of that rally to new and potentially extensive highs above 6.36. Weakness below 6.13 is required to negate this count.
wheat_may18_60min_chart
The hourly close-only chart eliminates much of the intra-day noise shown in the hourly bar chart above and clearly shows the early-Mar relapse attempt as a 3-wave affair as labeled. Left unaltered by a relapse below Fri's 6.15 low close, this 3-wave setback is considered a corrective/consolidative one that warns of a resumption of the 6.09-to-6.35-rally that preceded it.
wheat_may18_60min_cchart
wheat_may18_daily_chart
Unlike the NCAA Tournament Committee that, probably for some unfathomable fundamental reason, ignored Oklahoma State's broader body of work, it's important to appreciate the admittedly smaller-degree strength discussed above within the context of a developing base/reversal threat that could be major in scope. This strength:

  • comes on the heels of a confirmed bullish divergence in daily momentum above
  • shows the market "survived" a corrective retest of 27-Feb's 6.08 low
  • stems from 14-Feb's 5.99 low on a weekly log active-continuation basis below that was just 3-cents removed from the (6.02) 61.8% retrace of Aug'16 - Jul'17's entire 4.80 - 8.69 rally amidst
  • downside momentum that's been waning since last Oct.

Resumed "larger-degree" strength above 01-Mar's 6.36 high would not only reinforce this base/reversal count, but could leave this market vulnerable to steep gains thereafter as we've seen in Chi wheat, corn, beans and meal.
These issues considered, traders are advised to move to a cautious bullish policy at 6.28 OB with weakness below 6.13 required to negate this call and warrant its cover. Additional, more aggressive bullish exposure is advised on the immediate breakout above 6.36.

wheat_weekly_chart

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