Tech Guy Weekend Comments 5/21/22
We have discussed the rule of contraction and expansion in the grain markets. Markets go through phases of contraction where the trading ranges are small and phases where the trading range expands (20+ cent range in corn).
When Corn contracts it is building up energy. Then when it expands it is releasing that energy - putting it to use and the trading range is larger. On Thursday July Corn made a doji (indecision) on the day chart. Yesterday's small trading range did not violate the doji rule - a market most likely turning the other way.
In fact, July Corn made an Inside / Narrow range day yesterday - small range inside the previous day and smaller than the previous 7 trading days. This means energy was building up and being stored. It increases the odds that Monday will be an UP day for corn.
Also during the last 2.5 hours of trading in the stock market yesterday, The DOW futures rallied about 660 points up from the low of the day to close slightly positive. This will help take some selling pressure off of the grains and all markets for the time being. After days and weeks of heavy selling we will have some relief from stocks - this has undoubtedly been a burden on the grains of late.
Please look at the July Corn Daily chart below and notice the inside day/narrow range day and doji labeled - the last 2 bars. July corn is communicating to us that energy has built up for an expanded move.