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Medium Term Base in Wheat Trying To Form

03 April 2009

Late last year Wheat prices showed signs of recovering – in the end a modest recovery, before faltering. Support has been found above the Dec low and it looks as though the market is trying to base – but there are several hurdles that must be jumped before a convincing bullish picture is complete.

MONTHLY CHART – CONTINUATION: The collapse in Wheat prices has found support from the 76.4% retracement of the 1999-2008 accelerating upmove. This particular Fibo retracement can often be most effective as support/resistance.

DAILY CHART – MAY-09: The initial Dec/Jan recovery achieved a 23.6% pullback before petering out. The subsequent pullback has been deep, but has stopped short of the 484.25 Dec low. However, there is a good amount of ground to recover before we can talk about medium term base patterns. Looking closer…

DAILY CHART – MAY-09: The break through the s/term falling resistance was a small positive, but also note how it provided subsequent support on the correction. Bulls now need to see a close above the 563.00 23-Mar high, which would complete a small base pattern – and imply enough power to reach towards the small 76.4% bounce level around 620. Any buyers on the break will likely have initial stops just below the 498.50 03-Mar low, targeting towards 620 for partial profits, and then tightening stops. The 620 area provides the next hurdle, through which is one small step to the 658.25 early Jan high. A close above this latter would signal initial completion of a medium term base.

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