Are December Corn Futures Set for a Rally to $5.00?
December corn futures, often referred to as the “new crop” contract because it is the price for the U.S. crop that is about to get planted. The first crop progress report of the year showed just 2% of the crop is planted in the United States. With the crop hardly in the ground, there are uncertainties around production potential that tend to offer seasonal support to prices.
The seasonal backdrop coupled with a potential shift in momentum through the month of March may offer a good risk/reward trade to the upside. As you can see on the chart 480-485 has been a significant pocket dating back to last May, where it first acted as support. It eventually was the breakdown point on January 12th and has acted as resistance since then. If the market can chew through and achieve consecutive closes above this pocket, we believe it could spark additional upside momentum with the next significant resistance pocket coming in near $5.00 -5.06, which is both technically and psychologically significant. As you can see on the chart this was a congestion zone through the back half of last year and represents the 50% retracement (middle of the range) from last summer’s high to the year’s low. There’s also a small gap at 503 from January 2nd.
Looking at the weekly Commitment of Traders report we see funds holding a net shot position of 259,556 futures/options contracts, this would historically be looked at as a large net short position, especially for this time of year. Closes above technical resistance could spark short covering and add an additional tailwind to the market. A break and close below the recent lows of 460 ¾ would neutralize this bullish bias.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are 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. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
The seasonal backdrop coupled with a potential shift in momentum through the month of March may offer a good risk/reward trade to the upside. As you can see on the chart 480-485 has been a significant pocket dating back to last May, where it first acted as support. It eventually was the breakdown point on January 12th and has acted as resistance since then. If the market can chew through and achieve consecutive closes above this pocket, we believe it could spark additional upside momentum with the next significant resistance pocket coming in near $5.00 -5.06, which is both technically and psychologically significant. As you can see on the chart this was a congestion zone through the back half of last year and represents the 50% retracement (middle of the range) from last summer’s high to the year’s low. There’s also a small gap at 503 from January 2nd.
Looking at the weekly Commitment of Traders report we see funds holding a net shot position of 259,556 futures/options contracts, this would historically be looked at as a large net short position, especially for this time of year. Closes above technical resistance could spark short covering and add an additional tailwind to the market. A break and close below the recent lows of 460 ¾ would neutralize this bullish bias.
Check out CME Group real-time data plans available on TradingView here: www.tradingview.com/cme/
Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com/cme/
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are 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. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.