Thursday, March 27, 2014

Caution: Volatility ahead with grain report looming

By Erik Tatje


The Grains markets are gearing up for a big quarterly report on Monday, which will likely set the tone for the next big directional move in the grains.  Currently, soybeans have been enjoying a pretty sizable bull trend move with prices trading above $14.40.  Near-term momentum remains positive above $13.93 and the intermediate direction bias also favors the bull campaign.

Despite a positive directional bias in this market, traders should be on the lookout for some choppy trading ahead of Monday’s report.  A “calm before the storm” feeling could take over the beans and price action could be quiet ahead of the number.  Technically, the $14.60 peak remains the most significant level of resistance on the chart with near-term resistance coming into play around $14.52’6.  Support should be anticipated around $14.26’6 to $14.28’2 as well as $14.08’6  to $14.10.  Traders should also monitor significant support around $13.78 as a break below this pivot could shift the directional bias to a more negative tone.  This number likely won’t come into play this week, but very well could play a role following Monday’s report.

(May ’14 Soybeans 30-minute Bar Chart) (eSignal)

JUN. ’14 E-MINI S&P 500:

The S&P 500 is in an interesting technical position following yesterday’s break below the intermediate term ascending trendline on the chart below.  The market has been relatively range-bound throughout the month of March and the recent swing low has found support around the 1842.00 pivot on the chart.  What traders will now need to determine is whether or not price will find support at the support pivots at 1842.00 and 1837.00, or if the recent breakdown from the previous ascending trendline is going to spark a deeper correction.  Previous price action would suggest a sideways to positive bias. However, near-term momentum has not provided an “edge” for either side as price has been digestive at best.  If the market is indeed going to remain in a sideways choppy range, than there may be an argument to be made for getting long around these levels on dips into support.  With that being said, a bullish bias will be in serious trouble if weakness in price persists below the 1823.25 low on the chart.  Until then, continue to expect choppy price action in the equity indices.

(Jun. ’14 E-mini S&P 500 30-minute Bar Chart) (eSignal)


The euro is currently flirting with a downside breakout from an intermediate term ascending trendline which very well produce a pullback down to the 1.3700 support pivot.  Price failed from the 1.3165 support pivot overnight and has since started to roll over.  If there is to be negative follow through on this technical signal, traders should look to the 1.3700 area as an initial objective to the downside.  Below here, the next area of support on the chart doesn’t come into play until 1.3634 to 1.3643.  In order to avoid falling back on its heels, the euro will need to regain the 1.3765 technical pivot and hold above this level.  If price action is unable to do so, than near term momentum could carry euro prices lower.

(Jun. ’14 Euro Currency 30-minute Bar Chart) (eSignal)

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