Technical Analysis #C-WHEAT : 2019-09-19

Technical setup bullish for wheat price

Wheat price is rising despite increased ending stock and reduced consumption forecasts in WASDE. Will the wheat price continue rising?

The US Department of Agriculture World Agricultural Supply and Demand Estimates September report forecast reduced consumption and exports, and higher ending stocks this month. Lower global supplies were estimated to be balanced by higher carry-in stocks. And 2019/20 ending stocks are projected record large at 286.5 million tons. While these projections are downside risk for wheat price, technical setup is bullish.

WHEAT testing MA(200)  09/19/2019 IFC Markets Technical Analysis Chart

On the daily timeframe the WHEAT: D1 has breached the resistance line and is testing the 200-day moving average MA(200).

  • The Parabolic indicator has formed a buy signal.
  • The Donchian channel indicates uptrend: it is tilted up.
  • The MACD indicator gives a bullish signal: it is above the signal line and the gap is widening.
  • The RSI oscillator is above 50 level but has not reached the overbought zone.

We expect the bullish momentum will resume after the price breaches above the upper Donchian bound at 492.8. A price above that level can be used as an entry point for a pending order to buy. The stop loss can be placed below the lower Donchian bound at 460.0. After placing the pending order, the stop loss is to be moved to the next fractal low, following Parabolic signals. By doing so, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (460.0) without reaching the order, we recommend canceling the order: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

OrderBuy
Buy stop Above 492.8
Stop loss Below 460.0

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