Two weeks ago, on October 29, I advised traders on the following “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).” Last week we saw exactly that, December corn made the move higher and hit resistance at the major trend line (see red line on chart below on November 2). Corn then sold off until the USDA Report that came out on Tuesday November 9th. A classic case of sell the rumor, buy the fact. In other words, the trade “baked in” most of the bearish news and the USDA numbers came in within the range. Without extremely bearish news outside the expectations, it made sense the market has been moving higher. At the time of this writing corn is forming an inside day, if this continues and forms today, watch for a breakout next week. Upside number $5.80 and downside number $5.64 ½.
The “big picture” numbers 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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