ABSR Research: Chart of the Day
Chicago SRW wheat is leading the agriculture charge. March SRW has had a nice bounce off the recent lows over the past several days and on Thursday last week, the 14/37 day EMA crossed over into bullish trend territory. The last cross (bear) we saw in this indicator occurred Aug 30th when March wheat was trading 30 cents higher. Recent price action has also pushed momentum into a potentially overbought condition and our model has generated sell signals for both May19 and Jul19 futures. We would however, expect these signals to be part of a series of higher prices and will set sell stops below the market to ride any follow through. Signals were also generated for HRW but the statistical confidence level for HRW signals was to low to initiate trades. Compared to last year and the 5 year average (see chart) wheat prices are quite strong. In addition we are seeing good basis levels as well, highlighting steady demand for wheat even at the higher price points. Although a pullback that would cool the overbought condition is likely at some point, wheat futures appear set to test the $5.50 per bushel level in the near term.
Shawn Bingham, CAIA
Source(s): ABSR Research, NOAA.
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