Tech Guy Opening Calls & Comments 2/7/23
March Wheat - 1 to 2 Lower
March Corn - Steady to 1 Lower
March Beans - Steady to 1 Lower
We had several folks ask about diesel fuel today. I'm showing you the weekly chart of Heating Oil, which I have been told by farmers, follows diesel fairly well - not exactly.
The first thing I noticed is the historic rally from April 2020 to April 2022 that went up about $4.00 dollars to $4.7099.
The second thing that caught my eye is the fact that the current retracement from the highs is about 50%, which is a common Fibonacci backfill/pullback in all financial markets. In other words the odds are better than half that Heating Oil will not sell off much, if any more.
After it sold off to the 2011 to 2014 highs, HO rebounded about 50% back up then made a new low. After this, HO made 2 more lows as you will see on the chart. There is a rule of 3's in all of nature - not always.
Therefore, Heating Oil has made 3 lower lows to the 50% line - The second 2 lows and the respective highs after the lows, created 2 different balance lines which you will see as blue uptrending lines on the chart. These lines are reasonable levels for HO to rally up to over the next weeks and/or months.
If you look out to July on the chart, the lower line gives you about $3.83. The next line up reveals about the level of $4.75. These are possibilities if we think a good retracement will occur soon. $3.63 is where the lower line touches price and so on.
I will start following Heating Oil again and give periodic updates. The final thing I'd say is that June prices are more likely to be higher than today because of where the current retracement is (50%). Is it possible HO will sell off to 2.50, the 62% retracement first? Sure. Check out the HO weekly chart - then you can see all of these details.
March Crude Oil rallied today towards that 79 level where there is likely to be some selling pressure. Here is today's follow up chart.
The main thing I can say about Chicago March wheat is that it's filling out the right shoulder more to make the chart more balanced - The inverted head & shoulders is labeled S for shoulders, H for head and a new higher neckline has been drawn.
A rule of thumb with these patterns is when the right side of the neckline is higher than the left, this is more bullish than if they are even or lopsided the other way. The lower blue line is continuing to hold price up. Check out these details here.
March Corn and beans have both been backfilling back and forth, as expected. They each are working in an ascending triangle that is leaning upwards giving the observer a clue about what the market is thinking.
However, report day is always a bit of a wildcard, so we each just need to take a breath or 2 and let the dust settle later tomorrow. The other thing about Corn & Beans is that the front month spreads have been unwinding - new crop is showing more strength. This is not necessarily bearish for corn or beans overall. It's equally likely that the new crops needed to inject more risk premium in as the season wears on.