August 25, 2021
I recently participated in a team building exercise where everyone was given a different image, but we were not allowed to show it to anyone else. We had to determine where our picture fit next to everyone else’s by communicating. What we discovered was that everyone had the same image, but with a different perspective. Some images were zoomed in, while some were zoomed way out. Each picture provided a different perspective despite looking at the same information.
Grain market charts can be a lot like that depending upon whether you are looking at an hourly, daily, or weekly chart.
The daily chart for December corn shows that the bottom support trendline is still intact going back to at least March of this year, but can arguably be traced back earlier than that. It has followed parallel to the 200-moving-day average, creating a unique upward channel we hope will continue its trajectory higher.
Monday’s turn around traded through the support level but closed just about at it. Typically, the longer these support levels are tested, the stronger they become.
Following the Aug. 12 sell off of 20 cents from the high, this spooked buyers and gave short sellers more courage leading to the market giving up an additional 40 cents in the market. So far, this has not been enough to break the long term trendline highlighted below.
A break below this support level would trigger further selling but so far, they have become a buying opportunity for those wanting to stay long the market.
For those getting worn out by all the recent “chop” in the market, this trendline should provide more comfort and remind hedgers and traders that despite all the market noise, the upward trendline is still clearly intact.
Need more convincing?
If the daily chart does not convince you, look at the weekly chart below. This provides a different perspective, but the support levels do not change. The weekly charts carry more weight and influence when compared to daily charts as they represent a larger time period.
If we get too close to the market, we don’t always see the big picture taking place. It is easy to become too emotional and make snap judgment without all the information. That is why it is important to often take a step back to get a different perspective.
Matthew Kruse is President of Commstock Investments. He can be reached at [email protected].
Futures trading involves risk. The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that CommStock Investments believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.
About the Author(s)
President, Commstock Investments
Matthew grew up farming near Royal, Iowa. In 2002 he co-founded an investment company that purchased and operated Brazilian frontier farmland. As Chief Operating Officer he lived and worked in Brazil for nearly 14 years, overseeing production of 22,000 acres of soybeans, corn and cotton. He continues to participate in Brazilian agriculture by providing asset management services for institutional investors. Today Matthew farms in Iowa and Brazil, and holds Series 3, 30, and 31 licenses. He received bachelor’s degrees from Iowa State University in Political Science and Communications, then earned his Executive MBA from Walden University.
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