In prior articles, we noted how the $400.00, or $4.00 per bushel, level in the harvest contract (December) for corn futures was pivotal; and it appears that this market is still pivoting at this psychological and technical big round level.
The gray shaded region on the chart below ranges from 394.50 to 404.00. At this point, as long as price remains in that grey area or below, we lean to selling this market. First, we will look for a retest of the July 381.75 low, and then the June 374.00 low. Both of these areas offer this market some support as well. In the event that both of these levels should fail, we would target the contract all-time low at 358.50.
On the other hand, if this market turns the grey area into support, then first target would be the July 417.25 high. We think there will be some resistance at this area up to $420. However above that, we would target the $428 to $430 area, which represents the highs from 2015 and we expect this area to serve as strong resistance.
Traders should remember that this is potentially a volatile time of the year and that they should use caution. Some of the levels we mention will likely be in play next week, while the further levels may take multiple weeks to come into play.
To summarize our view, whoever wins the $400.00 level controls the next $20.00 move in corn.
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