Technical Analysis #C-CORN : 2018-09-18

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IFCMarkets Technical Analysis
IFCMarkets Technical Analysis

US farmers report improving corn yields, raising expected crop estimates. Will corn prices continue the decline?

The US Department of Agriculture indicates farmers report improving corn yields and condition in Feedback From The Field surveys. The average estimate so far this season is 170 bushels per acre with median yields at 180 bpa. And official 6 to 10 and 8 to 14-day weather forecasts are favorable after a dry week in the Corn Belt: a shift towards warm and wet conditions for most of the growing region. Higher expected crop is bearish for corn.

Corn price below fractal low 09/18/2018 Technical Analysis IFC Markets chart

On the daily timeframe the CORN: D1 has been trading with negative bias after hitting three-month high in mid-June. It has fallen below the 200-day moving average MA(200) which is declining.

  • The Donchian channel indicates downtrend: it is tilted lower.
  • The Parabolic indicator has formed a sell signal.
  • The MACD indicator is below the signal line and the gap is widening, which is bearish.
  • The stochastic oscillator is in the oversold zone, this is a bullish signal.

We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 349.80. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above last fractal high at 370.10. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (370.10) without reaching the order (349.80), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

Position Sell
Sell stop Below 349.80
Stop loss Above 370.10

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