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December Corn Futures Action Exemplfies Fibonacci Relationships


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Note: For a 3 week trial of the Commodity Concepts Weekly Report send an email to: info@commodityconceptsllc.com and ask for the "Weekly Report". This is a "cut to the chase" weekly report including both fundamental information and technical chart analysis with firm sales objectives designed for the US grain farmer. However, relevant information is applicable for grain traders, brokers, and end users.

Fridays USDA report estimated the US yield at a record large 178.4 bpa compared to the 176.2 average trade estimates. Production is expected to be 14.586 billion bushels. However, the USDAs ending stocks estimate of 1.684 billion bushels was only slightly above the average trade estimate and Julys report estimate of 1.552. However the global carryout came in above the trades estimate. The trades response to the report was bearish, however the ending stocks number doesnt give the market as much breathing room as this past year did. In the short term the market will likely be weighed down by the record yield projection but values should remain supported longer term.

Fibonacci relationships are evident on the December chart. Recently this market essentially completed a 50% upward retracement drawn off the May high to the July low at 3.88. Friday's downward correction off the July high came within a cent of completing a 50% retracement of the July low to high. Additionally, the yellow highlighted circles beginning with the July low are exact Fibonacci time zones that futures values reacted to. The 8th was a reaction point, the 13th day became the July high and the 21st day correlates with Friday's low. At press time it remains to be seen if the market rebounds off of Friday's low. Otherwise the next time zone that correlates with this particular cycle is August 29th.

Values closed the week out exactly on the 40 DMA line with short term technical momentum leaning to the downside. The next bearish target is a reaction point and retracement at 3.65 followed by support at 3.58. Additional support is found at the July low of 3.50. Upside resistance begins at the 18 DMA of 3.76 followed by the July high of 3.88. Secondary resistances which will need negative weather developments to achieve in the near term are found at a retracement of 3.99 followed by the gap fill at 4.11.



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Steve Fast is the owner and technical analyst of Commodity Concepts LLC based in Ohio. It is a futures chart based grain advisory service which utilizes professional trader techniques to assist in the decision making process. Clients normally utilizing this expertise are farmers, futures brokers, and grain buyers. He has been involved in the grain industry for over 36 years. Thirty-four of those years were in grain elevator management, merchandising and origination.  He began both the farmer advisory service and farming part-time in 2000. In 2015 he transitioned into full time grain farming as well as broadening the scope of the advisory service. More information can be obtained by logging onto www.commodityconceptsllc.com

 

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