Last week I advised traders on the following “The last 2 days the market has been consolidating. Traders should watch for a breakout above $5.41 or a break below $5.27 for short term market direction.” Refer to neon green line on the daily December corn chart below (that line is $5.41 on the chart). On Monday, Dec corn started to breakout as it traded to a high of $5.42 which triggered the buy signal I spoke about in last week’s write-up and we continued to get follow through to the upside all week. At the time of this writing December corn is trading at $5.67. While I do think the market may hit some resistance at this level, I believe the current fundamentals and technicals still favor the bulls. The market appears to be on track to head towards the upper major trendline (red line on chart). So far today, the market is forming yet another inside day, if this continues and actually forms today, watch for (you guessed it) another breakout!
The “big picture” numbers still remain the same and probably will for some time. I firmly believe a break below $4.96 could give the bears control of the market and a break above $6.39 ½ on the upside may have enough bulls behind it to propel corn to all-time highs. There are several minor areas of support and resistance inside this range that can help with short term market direction if violated. Call me directly at 1-800-367-7290 for more in-depth discussion on these numbers and to discuss trading strategies specific to your situation.
I would suggest using an option strategy to manage your futures position risk or an outright option strategy. Implied option volatility has come down quite a bit from its most recent highs mainly due to the consolidation and tighter trading ranges. I have 25 years of grain market experience, feel free to call or email with any questions you may have. Be sure to check out my archived weekly grain market insight articles posted on our website.
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