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Agricultural

Micro-Managing Corn

Posted 10/10/2018 8:20AM CT | RJO Market Insights

This market is currently wafting around the middle of the 50-cent range that has encapsulated it for the past four months that remains in the middle of the middle-half bowels of the 4.50-to-3.15-range that has engulfed it for the past FOUR YEARS.  The weekly chart below looks like the slow-moving hurricane Florence that ravaged the east coast last month.  And it doesn’t look like its going anywhere anytime soon.  Odds of aimless whipsaw risk are considered high under such range-center circumstances, so a more conservative approach to risk assumption is warranted.

Corn Weekly Chart

 

Corn Dec '18 Daily Chart

 

For the past few week’s we’ve averred a base/reversal-threat environment following a bullish divergence in short-term momentum introduced in 21-Sep’s Technical Blog that defines 18-Sep’s 3.42 low as one of importance and our new long-term risk parameter the market needs to break to negate a base/reversal count and reinstate the broader downtrend from May’s 4.30 high.  We’ve also recently identified 28-Sep’s 3.54 low as a smaller-degree corrective low the market is required to fail below to break the uptrend from 3.42, possibly render this recovery as a 3-wave and thus corrective affair and re-expose the summer’s downtrend.

 

On an even smaller scale, it’s not hard to see how much the “rally” has been laboring over the past couple weeks.  This has created the potential for a bearish divergence in momentum that, again, on a very micro scale, will be confirmed with a failure below Fri’s 3.63 minor corrective low.

 

Such a micro mo failure will only allow us to conclude the end of the uptrend from 28-Sep’s 3.54-1/2 low, NOT the entire recovery from 18-Sep’s 3.42 low.  However, it’s interesting to note that 05-Oct’s 3.69-1/2 high was just a 1/2-cent away from the (3.70) 61.8% retrace of the decline from 31-Jul’s 3.89 high to 18-Sep’s 3.42 low.  Furthermore, Fri’s 3.69-1/2 Globex day-session high was just a tick away from the (3.69-1/2) 0.618 progression of 18-to-28-Sep’s 3.42 – 3.67 initial counter-trend rally from 28-Sep’s 3.54-1/2 corrective low.

 

This pair of Fibonacci retracement and progression relationships combined with waning upside momentum warn of an interim peak/reversal-threat environment from last Fri’s 3.69 high.  An admittedly micro mo failure below 3.63 will confirm the divergence and provide a favorable risk/reward SCALPING opportunity from the bear side.  The market’s downside potential below 3.63 is unknown.  It could range from a few pennies to a more extensive assault on Sep’s 3.42 low.  What we WOULD know with confidence and specificity is what the market would have to do to nullify a bear scalp: recover above 3.70.

 

These issues considered, a longer-term bullish policy remains intact with weakness below at least 3.54 required to threaten it and commensurately larger-degree weakness below 3.42 to negate it and warrant its cover.  From a very short-term/scalping perspective however, we believe a failure below 3.63 offers a favorable risk/reward opportunity from the bear side with a recovery above 3.70 required to negate this call and reaffirm the broader base/reversal count.

Corn Dec '18 60 Min Chart

 

RJO Market Insights

RJO Market Insights specializes in forward-thinking analysis, focused on potential market-moving events and dominant factors driving price discovery. Detailed fundamental and technical coverage across multiple commodity sectors is combined with objectively-constructed trade recommendations to provide an industry-leading product for R.J. O’Brien’s Institutional clients, commercial hedgers, introducing brokers and individual investors free of charge. Content is distributed in both text and audio formats, with specialized service offerings provided by account type.
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