WHEAT breaks back below 20-day moving average
Wheat (WHEAT) Technical Analysis Report for May 22, 2020 | by Techniquant Editorial Team
WHEAT ended the week 1.8% higher at 508.75 after losing $7.00 (-1.36%) today. Closing below Thursday's low at 512.00, the market confirmed its breakout through the previous session low after trading up to $8.75 below it intraday.
Daily Candlestick Chart (WHEAT as at May 22, 2020):
Friday's trading range has been $13.00 (2.52%), that's slightly above the last trading month's daily average range of $11.84. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently lower than usual for WHEAT.
After trading down to 503.25 earlier during the day, the contract bounced off the key technical support level at 505.50 (S1). The failure to close below the support might increase that levels significance as support going forward. When prices bounced off a significant support level the last time on May 12th, WHEAT actually lost -2.48% on the following trading day. WHEAT closed back below the 20-day moving average at 513.83.
The market shows weakness in the short-term (in accordance with its long-term downtrend) with only the medium-term trend still being bullish.
Selling could speed up should prices move below the close-by swing low at 496.00 where further sell stops might get triggered. With prices trading close to this year's low at 491.50, downside momentum could accelerate should the contract break out to new lows for the year. As prices are trading close to May's high at 528.00, upside momentum might speed up should WHEAT mark new highs for the month.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Closed below last periods low" stand out. Its common bearish interpretation has been confirmed for Wheat. Out of 648 times, WHEAT closed lower 54.32% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after 10 trading days, showing a win rate of 53.09% with an average market move of -0.12%.
With four out of the other seven Commodity Markets closing lower today, the ones that stand out on the negative side are COFFEE losing -1.03% and CRUDE closing -0.99% lower. On the flipside the best performers have been SILVER closing 1.38% higher and NATGAS gaining 0.88%. Read more