Corn futures have been very quiet even during 2017’s harvest season; and over the last month, the futures have been moving in a sideways range from the $346.50 to $355.00 area.
Coming up tomorrow (Friday the 12th) is a WASDE report due out at 12:00 p.m. EST. This report usually causes some volatility in the grain markets, giving a better idea of the final numbers from the 2017 harvest and an early picture of supply and demand going into this spring’s 2018 planting season.
Today we will take a look at the technical view of corn heading into this potentially volatile time. The chart below covers the past month of price action using two-hour candlesticks.
While we don’t recommend trading the WASDE report itself, we will note that usually corn has a milder response than other affected markets such as soybeans, and therefore, it could be a more conservative play.
The $350.00 price, marked in yellow, has been a big round pivot for months. We are using this price as a market bias, wanting to be long above and short below. Just above that, at $350.75, is the 50% retracement of this year’s early range, which also gives credence to our pivot area of $350.00.
Above $350.00 our view is plain and simple. We would look for a higher move up to this year’s early high at $354.75. This market has seen a lot of resistance above $355.00 over the past several months. Unless the WASDE suggests a fundamental change, which is unlikely, then we would look to establish bearish positions at that level.
To the downside, if price breaks the orange trend line just below $349.00, we would look to be short this market, watching for a revisit of the red area from $346.50 to $346.75.
Aggressive buyers may want to go long here, but we don’t expect this area to hold as support. We will be watching to see if corn will reach $325.00 this spring, which is the next big round number, as well as the 23.6% Fibonacci extension from last year’s range. That $325.00 spot is the next area in which we see strong support.