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Wheat is the latest commodity ‘buy’ candidate

In Tuesday’s edition we warned that various commodities would probably present trading opportunities on the ‘long’ side in the near future. This was due to a bottom extension at a weekly scale in the commodity index that we follow most closely. Now there are some signals in Wheat to report that mean it is the second candidate of the group. A daily-scale compression formed yesterday in the December 2014 contract that may be breaking upward today. This matches the weekly-scale bottom extensions in the continuation price series that we saw recently, meaning that the downtrend is probably over and that rallies are now likely. The Ukraine/Russia situation adds to the potential as Ukraine is the ‘breadbasket’ of Central/Eastern Europe and the harvest is only just gathered. Charts:

28-08-2014 14-45-54

It is a little early in the session to call for a ‘break’ as it is only 10.00 EST as I write but there is s risk that the price will run up more by the close. As a tactic, we suggest buying now with a close stop somewhere below yesterdays low, say at 540.