RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Yesterday’s break below 23-Oct’s 4.23-3/4 low reaffirms our bearish count as well as the 4.43 level as a short-term bear risk level discussed in 23-Oct’s Technical Blog.  As a result of the past few days’ resumption of not only the downtrend from 27-Sep’s 4,63 high, but also the broader collapse from 05-Jul’s 5.80 high close, the hourly chart below shows Thur’s 4.43 high and 27-Sep’s 4.63 high as the latest smaller- and larger-degree corrective highs that now serve as our new short- and longer-term risk parameters to a still-advised bearish policy.

Wheat 60 min Chart

Wheat Daily Chart

These risk parameters will come in handy given waning downside momentum on both a daily (above) and weekly (below) scale as the Dec contract makes new contract lows as this bear resumes.  Basis the Dec contract the trend is down on all scales and should not surprise by its continuance.  With market sentiment levels at understandably historically bearish levels “enough” to warn of a major BASE/reversal-threat environment, it is imperative for the market to sustain losses below recent corrective highs in order to maintain the bear.  Its failure to do so would expose a base/reversal count that could be major in scope.

Wheat Weekly Chart

On a weekly log active-continuation chart basis below, the 4.16-to-4.12-area has supported this market all year.  After establishing new lows for the Dec contract, it’s failure to sustain losses below 4.43 while also holding above this 4.16/4.12-area support would not be able to be ignored as significant from a bullish perspective.  Admittedly, the entire Aug’16 – Jul’17 recovery attempt looks like a textbook 3-wave and thus corrective affair that, if correct, warns of a resumption of the secular bear to new lows below 3.86.  But given the gray area surrounding futures contract rolls, might the current new lows in the Dec contract suffice as the 5th-Wave completion of a secular bear?

As opposed to getting into a debate between Elliott “theory” and the vagaries of contract rolls, we prefer to default to the most factual technical inputs like momentum, contrary opinion and the specificity of objective corrective highs and risk parameters like 4.43 and 4.63.  Until these levels are recouped, the trend is down to indeterminately lower levels ranging anywhere from 4.20 to sub-3.86.  The market’s failure to sustain losses below 4.43 will be the first evidence against such a bearish call and for a base/reversal count, warranting a shift from a bearish policy to a bullish one.  In lieu of such 4.43+ strength further losses remain expected.

Wheat Weekly Chart

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