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Tech Guy Weekend Comments 1/21/23

From March Wheat comments last Thursday:

"I am still bullish on March wheat despite it not showing much progress this week. Let's see if that 728.75 price holds tonight and tomorrow, or if it doesn't, see if it attracts good buying - I think it will."

On Friday March Wheat tested the 728.75 low by 4 ticks, the buyers showed up as expected, and wheat rallied about +15 cents up to end at 742.75. The net gain on the day was +8.25.

As has been discussed, the next up target is near 800 - it is actually between 800 and 810. I will detail also where and why are the targets above 810. Remember, nodes or bumps/swing points on the left side of a chart create resistance levels as a market rises on the right.

There are 4 up corrections on the left side of the March Wheat chart where the swing highs of these bumps are referred to with a down pointing red arrow on the chart. These areas will create temporary stopping points where backfills will occur.

After March Wheat moves up to 805, I expect a pullback between 775-770. Then another move up should occur, taking prices up to 860 to 890 then another backfill from there to 830 or so with another leg up to about 920.

These are ballpark prices and we will have to wait to see the actual movement. You will see how these estimations are derived on the chart from the bumps and the array of supply/demand lines drawn.

These rough estimations are to highlight that wheat will not go straight up, but rather have some pretty big swings. I have drawn the expected rough price path that March Wheat should travel with blue up and down lines on the right.

In general, a market's movement up on the right generally mirrors that of the path on the left. This probable price action in wheat should offer several trade's (in and out) for the active trader. Here is the chart.

Those highs in the 674 region of March Corn chart on the left which were mentioned yesterday did indeed fuel buying interest today. The red horizontal line labeled "this line" runs across these highs we are talking about. Check out these details on yesterday's corn chart here.

The March Soybean front month spread against all back months is demonstrating bullish divergence. The bean market's demand for product right now has been increasing daily, even during the correction.

Yesterday again, while the March contract lost 8 cents, July lost 10.75, so the March/July spread has continued to widen the inversion. I would imagine that this will turn the flat price back up, but I don't know for sure. Here is what that chart looks like.

This is the updated March - continuation daily chart here. The settlement and last price was a 2.5 cent disparity, which is a few ticks either side from the top of the ascending triangle. We will see what Sunday night brings.

The fund longs increased their position by 28,000 in soybeans and 44,000 in corn during the most recent run up in prices, per the commitment of traders short form (futures only) report yesterday.

Their respective open interest also increased by about those amounts indicating new fund longs entering the markets. This phenomenon is generally considered bullish - the strong money is pushing the trend.

March Crude Oil update: Oil consolidated yesterday, finding buying support on the neckline of the inverted head & shoulders. You will see this labeled, "neckline test" on the 4 hour chart. The most probable pathway forward is for crude's price to continue to mark up with a target between 89 and 94.

March S&P update: On Thursday, the S&P tested on the top of the 2nd channel line at 3900 it had previously rallied up from. It began correcting down from the 1st upside target on Wednesday and looks like it will continue to rally to the next target at the 4175 level. You will see this detail on the 2 hour S&P chart here.


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