Technical Analyst, Saxo Bank
Summary: Wheat, Corn and Soybeans have all formed bottom and reversal patterns with substantial upside potential . Coffee moving against the trend has formed a bearish pattern and could collapse to January lows
Wheat has formed a Double Bottom and if it closes above 712.50 it is confirmed with a potential short-term to test the and medium-term falling trend line and reach the 1.618 projection 748.65. A break above could pave the road towards strong resistance at around 800.
RSI Divergence supports the trend reversal picture.
IF Wheat slides back below 654 the downtrend resumes with down side potential to around 615.
The strong bounce came in Wheat after sellers on several occasions have failed to close the grain below strong support at around 677. See weekly chart. If Wheat closes a week above 800 the medium-term downtrend has reversed.
Corn is continuing towards potential Inverted Shoulder-Head-Shoulder target around 670 as illustrated with the vertical arrows and the Fibonacci Extension. There will be some resistance around the 55, 100 and 200 daily Moving Averages coming down currently around the 0.618 Extension.
RSI is close to breaking bullish and if it does close above 60 it will further confirm the bullish reversal picture.
For Corn to demolish and reverse this bullish picture a close below right shoulder is needed.
Weekly chart Corn bounced from the lower rising trendline but the medium-term trend is still down until Corn closes above 689.
Soybeans bounced strongly from strong support at around 1,406 and could continue up to around the 0.618 retracement at round 1,487.50. Expect a correction from that level where both the 100 and 200 daily MA will provide resistance. A spike up to test the lower Cloud span B and the 0.786 retracement around 1,510 could be seen.
RSI is still negative however, and if Soybeans drop below 1,400 down trend will resume and be extended.
Coffee. If closing below Neckline i.e., below 170, a SHS like pattern has been confirmed with potential down to around 143. Sell-off could accelerate if Coffee closes below the cloud i.e., below 167.50.
To demolish and reverse this bearish picture a close above right shoulder at 184 is needed.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.