MGEX Hard Red Spring Wheat Analysis
2020.11.25 MGEX Hard Red Spring Wheat Analysis
I was asked to provide an analysis of the MGEX Hard Red Spring market.
I found relevant data on Barcharts, however, I found the charting software cumbersome.
Please let me know if you are aware of an alternative.
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For this exercise, I am using the March 2012 contract price chart.
Let’s look at a long-term weekly chart below.
******Click on the chart to expand******
As you can see in the above chart, the price is rising, however, it is still well below the trend line dating back to 2012.
When I compare the 2002 to 2005 fractal to the one from 2012 to the current date, they look similar to me.
Let’s look at the shorter-term weekly chart below.
I put annotations on the chart to make it easier to comprehend.
I see the 200 week MA has been acting as resistance.
Price is following a channel and could have one more move higher with my target in the red rectangle.
Understand that is my target if the price moves higher and is an area that I would reassess my long positions taking some or all my profits.
If the price breaks down out of the channel, which I anticipate this happening at some point, then I have the green target.
If the price moves higher to the red rectangle area, then I will adjust my green rectangle higher, perhaps to the 511-5 level.
Our ideas change as we get more information.
Remember, we don’t know when or where the price is going, however, we do want to be prepared for either move.
On to the daily chart below.
Again, I included annotations on the chart.
Price is above a declining 200 Day Moving Average (DMA)
Price is finding support in the area of the red rectangle. If the price breaks below this red rectangle, I anticipate the yellow trendline to break also.
If they break, then I anticipate a wide green target between the 61.8 and 78.6% retracement levels.
The green target area is where I would consider adding to my long position and covering my shorts.
If the support and trend line hold, then we will assess and review the weekly chart.
I hope that you enjoyed this analysis and that you consider sending me ideas to review.
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