July Corn corrected down to 777.5 today, which was a little bit more than 62% down from the Monday - Thursday up leg. I entered a long (buy) at 780.5. Sell stop is 774. Upside target is 825-830. My reason is an assumed up leg (until proven otherwise I assume July corn began an up leg Monday May 9) and the nice pullback Friday offered an opportunity to buy. I expect higher highs to follow next week. Not risking much if I'm off on this one.
July Soybeans closed the week strong. I look for continued buying next week. First resistance is 1666 - 1680. My target for trade entered last Monday at 1584 is still 1675.
July wheat was so strong it couldn't even test the support line at 1148 today. Wheat was only able to sell down to 1171 before rallying back and settling at 1180. It will most likely continue up to test the March high at 1278.25.
The weekly new crop (Dec) chart completed a weekly bullish engulfing pattern today. Let me try to explain this. The body of a candlestick bar runs from open to close. The body is most important for technical analysis because it gives clues to the bullish or bearishness. A red body is a down (selling) bar and a green body is an up (buying) bar.
The bullish engulfing pattern is comprised of last week's red bar and this week's green bar. Last week was a red body down bar (Dec Corn sold off). This week (Sun night) opened below Friday's (May 6th) close then closed today above last weeks open (green body). What does this mean?
The 1st down red weekly bar, the sellers (bears) were in control taking price down. This week the bulls took over and produced enough buying pressure to move price all the way back up above the previous weeks high and open (green bar). What is most important is the close (green body) for this week was above the red body of last week (above the open). Also this weeks bullish green bar is more expansive than last weeks red bar - buyers have more momentum than sellers had to the downside last week.
The bullish engulfing pattern represents a situation where the bears controlled the price of Dec corn last week only to have the bulls decisively take over the lead by the end of this week. Ultimately, it signals the most likely scenario (not bullet proof) here is continued buying next week (another green up bar).
Please Study the chart below as the notes and arrows will hopefully help it make better sense. The bullish engulfing pattern is the last 2 weekly bars on the chart below (red bar down then green bar up). I learn this stuff best when I read a bit then look at the corresponding chart scanning back and forth until I see on the chart what the words are saying: