October 18, 2021


Technical Analysis of Financial Markets

Your Monday Look At The Agricultural Complex

Your Monday Look At The Agricultural Complex

Heading into the week of May 15th I would expect to see Corn to continue its gradual uptrend. Starting with the Cash Weekly chart of corn we see that last week a bullish engulfing pattern was printed. This candle pattern occurs when the body of the most recent weekly bar overlaps (engulfs) the body of the previous week, serving as a signal that buyers overwhelmed sellers for the previous week. Also shown on the spot corn weekly chart is a horizontal line showing the volume point of control just above the closing price on Friday. A push above this level and a close above the line on the weekly candle will be a strong confirmation the bulls have taken control. Lastly from this chart we can see a slight uptick in bullish momentum as seen by a gradual push higher in the RSI line last week.

The chart of the daily corn futures serves to show a well defined recent uptrend as shown by the blue line. An uptrend is defined simply as a period of higher highs and higher lows which we have seen from corn since early April, when it bounced off the 38.2% Fibonacci Retracement Level of September to

March rally.

From an intraday perspective, taking a look at a 60 minute chart I’ve added a VWAP study as displayed by the shaded region in green. VWAP (Volume weighted average price) is used by institutions to make buys and sells so as to not disturb the market prices with large orders.
If price gets too far above VWAP, we can sometimes expect to see a slight pullback as it is a good intraday price to sell. You can see that when the 60 min bars trade too far above the shaded region they often pull back to align themselves with price once again. While I don’t utilize VWAP to forecast future prices, it is an indicator to keep an eye on for making precision entries, making sure you aren’t buying at a daily extreme.

inally, included is an updated RRG. RRGs (Relative Rotation Graph) in which we have a basket of commodities charted against each other, as well as against a benchmark on a relative basis. The benchmark I used in this chart is the Thompson Reuters CRB Index. At the most basic level, you want to be involved in sectors that are in the upper right quadrant from the long side. Another approach is to allocate into those sectors that are making a move into the upper right “Leading” quadrant from the upper left quadrant. There wasn’t much to update this past week on the chart other than the Live Cattle has gone from the Leading Quadrant to the Weakening quadrant, and I’ve added Nat Gas Futures as well which began to outperform as of this past week.

n sum, I think we see Corn continue on its uptrend throughout the coming week. Levels to watch remain the same as last week. Keep a close eye on the price action of corn around the 365 level. How price responds to this level should give us a good idea of what to expect in the coming weeks going into the summer.

Support Level 1: 365
Support Level 2: 357

Resistance Level 1: 380
Resistance Level 2: 385