Wheat Update August 2015 (M)

I am looking for a significant bear rally in wheat and while I thought that rally had kicked off there is the potential to see one final low if current monthly support does not hold. Price has traded as outlined in the last analysis calling for a test of the lows which now sees price at a critical juncture.
 
Let’s review the monthly chart to see this support and a likely bottom level if that support does not hold.
 

WHEAT MONTHLY CHART 

The support I am watching closely stems from the monthly PSAR indicator which shows the dots below price. These dots currently stand at $471 and will likely be around $474 in September. I continue to favour the bear rally underway as long as this support holds.
 
And if this support does not hold where is price likely to go?
 
The Bollinger Bands show the price finding resistance at the upper band and now just under the middle band. It is certainly possible for this middle band to provide support and see price head higher. If not then I will be looking for price to head to the lower band which currently stands around $434.
 
The fact is there is a pattern of lower lows and lower highs and the bear rally won’t be confirmed until price can break above a previous swing high.
 
There is the possibility of a “three strikes and you’re out” low formation if support is broken. That is denoted by the numbers 1 to 3.
 
The RSI already has a triple bullish divergence in place which often leads to a significant rise. Price breaking support now to put in a new low would likely set up a quadruple bullish divergence.
 
Anyway, let’s see how this monthly PSAR support fares. 
 
The long term outlook presented in February 2015 calls for a final bear market low below $400 but I expect a significant bear rally before then.
 
 

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