Corn Update July 2015 (D,M)
Created on Saturday, 11 July 2015 00:37
Written by Austin Galt
The corn price has flown higher in recent weeks and is now playing out as expected from previous analysis. Let’s revise the short term picture using the monthly chart before reacquainting ourselves of the bigger picture using the monthly chart.
CORN DAILY CHART
We can see the impulsive move higher since the recent June low at $346.75.
I have drawn a Fibonacci Fan from the October 2014 low to December 2014 high and in previous analysis we were looking for price to find support at this 88.6% fan angle. Nice.
I have added Fibonacci retracement levels of the move up from October 2014 low to December 2014 high. In previous analysis, we were looking for price to find support at the 76.4% level which stands at $341.56. Price couldn’t quite make it that low pulling up around $5 short. Not bad.
The RSI showed a bullish divergence at this low and has now made a new high in bullish fashion.
The Stochastic and MACD indicators both showed triple bullish divergences at the recent low so it is no surprise to see a significant rise in price take place.
Let’s now move on to the bigger picture with the monthly chart.
CORN MONTHLY CHART
This monthly chart was shown back in February 2015.
Firstly, there looks to be a massive 5 point broadening top in play with the 2008 top point 1, the 2008 low point 2 and the 2012 top point 3. Price now appears to be tracing out its way to a point 4 low. After that low I expect a big move up to all time highs and a final point 5 high.
The way to this expected point 4 low looks to be taking one of two routes. My favoured scenario is there is a 5 point broadening low in play with points 1 to 3 already in place. Price is now headed up to put in the point 4 high before coming back down once again to put in the final point 5 low. This point 5 low would also be the point 4 low in the massive 5 point broadening top formation. Are you with me?
An alternate scenario is price puts in a lower high below the point 2 high which stands at $519.50. This is most definitely a possibility and using doing some Fibonacci calculations of the move down from point 2 high to point 3 low would help in determining where that lower high might be. While not shown the 76.4% level at $472 and the 88.6% level at $496 would be levels to watch.
The point 3 low was set in October 2014 at 318.25 and this low was accompanied by bullish divergences in the RSI, Stochastic and MACD indicators. I suspect the final low will set up triple bullish divergence. Let’s see.
If my favoured scenario plays out which is the 5 point broadening low, where is the point 4 high likely to be?
I have added Fibonacci retracement levels of the move down from 2012 top to recent point 3 low. Previously, I favoured the 61.8% level at $646 to see in the point 4 high. I think this may be stretching things a bit far and now favour price to clip the 50% level which stands at $583.
I have added moving averages with time periods of 100 (red) and 200 (black) which are in bullish order with the red line above the black line. I expect these averages to come back closer together before the move to new all time highs commences.
Finally, the PSAR retains its bullish bias with the dots providing support on the recent move down.
Summing up, price generally continues to trade as expected and we await an important major high before the move to final low commences.