Late-day selling pressure sent the wheat market lower after posting new highs during Wednesday morning's session. The initial rally to nearly $7.40 per bushel at the open turned sharply lower, to create the upper boundary of a large Rising Wedge chart pattern.
This potentially bearish pattern, shown here on the hourly candlestick chart, may indicate a near-term top with more selling to come as the trading week progresses. The nearby wheat futures broke through the wedge's support trend line at $7.28 pr bushel at the close, setting the stage for a possible run to the projected downside forecast.
If carried to completion, this would imply a move to between $7.11 and $7.21 per bushel, which would be about half of the gains posted by the market so far this week. This may represent a healthy correction in the overall uptrend, with little long term technical damage done unless the selling pressure accelerates beyond the target level.
A reversal back into the wedge with trading above $7.30 would largely negate the breakout, with a move above $7.45 needed to trigger a reversal to the upside. Traders will be watching the outcome of this pattern for signs of a larger directional move on more prolonged time frames.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
