Wheat saw another bullish end to the week after a favorable USDA report.
In the last post, we looked in TA terms at whether the current rally's first impulse occurred in March or on April 19th. The latter (in pink numbers) seems to have been the case as we saw the 5th wave up to near the 2.618 Fib. If this analysis continues to hold true, TA wise an ABC correction down may soon occur. This correction should also reflect the current supply side bearish fundamentals of the grain and it will be interesting to see how deep it goes. However, if the ABC down is somewhat shallow, this could suggest the continued accumulation of a bullish trend, with adverse weather and or climate anomalies the main concern going forwards.
Another reason to suspect this coming correction may be shallow is the now imminent Golden Cross of the daily 50MA in orange and 200MA in white. While events like the crossing of moving averages are not certain things, they do indicate trend direction and are worth considering here. Remember though, that supply fundamentals remain currently bearish and a correction will have to reflect that at some stage.
In terms of those weather/climate concerns, market analysts (link below) have identified that the expected return of the La Nina weather system in the coming months historically means drought in Russia, the largest producer. This in turn may significantly reduce yield in Russia and affect global prices. This demonstrates the fickle and thus volatile nature of grains, as the same analysts were pointing out in early March how Russian oversupply, some of it stolen from Ukraine, was continuing to strangle the market. Furthermore, it should not be forgotten that this will be a climate change La Nina, meaning it may prove unpredictable and thus volatile on markets.
www.grainbrokers.com...uction-under-threat/
Not financial advice and you trade at your own risk.
In the last post, we looked in TA terms at whether the current rally's first impulse occurred in March or on April 19th. The latter (in pink numbers) seems to have been the case as we saw the 5th wave up to near the 2.618 Fib. If this analysis continues to hold true, TA wise an ABC correction down may soon occur. This correction should also reflect the current supply side bearish fundamentals of the grain and it will be interesting to see how deep it goes. However, if the ABC down is somewhat shallow, this could suggest the continued accumulation of a bullish trend, with adverse weather and or climate anomalies the main concern going forwards.
Another reason to suspect this coming correction may be shallow is the now imminent Golden Cross of the daily 50MA in orange and 200MA in white. While events like the crossing of moving averages are not certain things, they do indicate trend direction and are worth considering here. Remember though, that supply fundamentals remain currently bearish and a correction will have to reflect that at some stage.
In terms of those weather/climate concerns, market analysts (link below) have identified that the expected return of the La Nina weather system in the coming months historically means drought in Russia, the largest producer. This in turn may significantly reduce yield in Russia and affect global prices. This demonstrates the fickle and thus volatile nature of grains, as the same analysts were pointing out in early March how Russian oversupply, some of it stolen from Ukraine, was continuing to strangle the market. Furthermore, it should not be forgotten that this will be a climate change La Nina, meaning it may prove unpredictable and thus volatile on markets.
www.grainbrokers.com...uction-under-threat/
Not financial advice and you trade at your own risk.