Intra-Range Corn Bear Resumes, Defines New Key Flexion Point

September 12, 2018 1:09PM CDT

While the hourly chart below shows that the market has yet to break 12-Jul's key 3.50 low, the extent and impulsiveness of today's break below 29-Aug's 3.55 low reinstates and reaffirms at least the intermediate-term downtrend from 31-Jul's 3.89 high and likely makes a sub-3.50 break a foregone conclusion.  The key by-product of this resumed weakness is the market's definition of 05-Sep's 3.69 high as an admittedly smaller-degree corrective high that the market would now be fully expected to sustain losses below to maintain a more immediate bearish count.  Per such we are considering this 3.69 level as our new KEY risk parameter to a resumed bearish policy and exposure.

Former 3.55-area support is considered new near-term resistance.

Corn Dec '18 60 Minute Chart

Corn Dec '18 Daily Chart

On a daily log scale basis above, again, the extent and impulsiveness of today's break below 3.55 re-exposes not only the past month-and-a-half's downtrend, but also the broader decline from 24-May's 4.30 high.  The importance of 05-Sep's 3.69 Globex day-session high is obvious in this perspective as the bear now has every chance to PERFORM.  This relatively tight but extremely important risk parameter will come in handy given the numerous times over the past FOUR YEARS that this market has totally rejected the lower-quarter of the 4-year range around 3.42 or below.

On a daily close-only basis below the Dec contract will likely be closing at a new contract low today.  On an active-continuation chart basis 25-Jun's 3.49 low close remains as prospective support.  But regardless, the trend has reasserted itself as down to what we believe must be approached as indeterminately lower levels.  What we know with specificity is where the bear should NOT trade in order to maintain a bearish policy:  above 3.69.

Corn Dec '18 Daily Chart (2)

Corn Weekly Chart

The weekly active-continuation chart above clearly shows the bear's dislike of and inability to perform around the lower-quarter of the past four years' incessant lateral range.  And the monthly log chart below shows hows excruciatingly choppy and lateral the past two major BOTTOMS/BUYING OPPORTUNITIES have been.  This market's inability to get off its duff within the context of a still-arguable major, multi-year BASE/reversal process is not only nothing new, it's common.  Excruciating, but common.  And we are once again tasked with navigating the rest of whatever the bear has in store and, more importantly, acknowledging that remaining downside is likely to be short-lived and that another tremendous risk/reward buying opportunity will be presented.

For the time being however, longer-term players are advised to step aside from any bullish exposure.  Producers are advised to maintain bear hedges per yesterday's option strategy with a recovery above 3.69 required to warrant its cover.  Shorter-term traders are OK to either maintain bearish exposure or initiate bearish exposure from the 3.55-to-3.60-range and expected resistance with a recovery above 3.69 negating this call, warranting its cover and flipping the directional scales back to the bull side.  In lieu of such 3.69+ strength further lateral-to-lower prices are expected.  We will be on keen watch for any countering bullish divergence in momentum needed to stem the slide and identify a more reliable low and support from which a cautious bullish policy can be objectively based and managed.

Corn Monthly Chart

 

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.