Technical Update - A technical look across the Grains world
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Wheat testing key resistance
Milling Wheat on the rise
Corn range bound
Soybeans struggling but seems to have found support
Coffee correction could be over, uptrend pending
Collapse in Cotton seems to have exhausted
Rapeseed building uptrend
Wheat has spiked above 0.382 retracement at 939 and key resistance at 940 a couple of times but cannot keep momentum to close above.
If Wheat manages to close above 940 and move above 950 there is short term upside potential to the 0.618 Fibonacci retracement level at 1,070 in the middle of consolidation area 1,027 -1,109.
The strength indicator RSI is a bit indecisive, showing bullish sentiment but with minor divergence indicating there is risk of Wheat dropping bearish out of its rising channel pattern. Key support to look for is 872.50. A close below is likely to send Wheat to 820-810 i.e., dipping below 55 SMA. If closing below 819 bear trend is confirmed and a retest of 725 is likely.
Milling Wheat is breaking above 0.382 Fibonacci retracement and resistance at 360 confirming uptrend supported by higher RSI values. Resistance at 371.25 which is likely to be taken out for a move higher to 392-400. To reverse the uptrend a close below 344.
Corn is rangebound between 654 and 700. A close below or above will give direction. Bullish RSI indicates break out will be to the upside. If that scenario unfolds there is resistance at around 726.
If Corn breaks above there is room up to around 775-800.
To demolish and reverse this likely uptrend a close below 654 is likely to send Corn down to around 614-608
Soybeans could have found support around 1,349. RSI is still bearish however, and trend is currently down. Soybeans needs to close above 1,450 to reverse that.
If Soybeans closes below 1,349 there is downside risk to 1,250-1,200.
Robusta Coffee is in a corrective downtrend forming a falling wedge like pattern finding support at the 0.50 retracement at 2,135. A close below will most likely send Robusta to the 0.618 retracement at around 2,080.
A close above the upper falling trend line and above 2,195 will reverse the downtrend for likely new highs. Key resistance at around 2,300
Coffee seems to be forming a descending triangle pattern. Key support around the 0.618 retracement of the July to August uptrend. If Coffee closes below 212 Coffee could be hit by sell-off down to around 200-195 i.e., July lows. Some support around 205.
However, RSI is still bullish and a close above the falling trend line and above 227 is likely to spur a rally that will test August peak around 243.
The collapse in Cotton seems to have come to an end – at least short term. Divergence on RSI indicates exhaustion of the downtrend, and a correction is in the cards. A close above 90.55 is likely to fuel a move the 0.382 retracement at 98.15 potentially test 100 and the 55 SMA which is likely to provide some resistance.
If Cotton closes at current levels or higher is has formed a bottom and reversal pattern on the weekly chart after finding support at the 200 weekly SMA. Divergence on RSI supports the bottom and reversal scenario.
Rapeseed has broken bullish out of falling wedge pattern formed over the past couple of months. Rapeseed being above its 55 SMA has no strong resistance until around 714. 100 SMA will provide minor resistance, however.
Short-term trend is up supported by Bullish RSI. If Rapeseed closes below 611 the uptrend is likely to be reversed.
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.