Why You Should Sell Wheat Here Before Prices Move Lower

December soft red winter wheat (ZWZ26) futures present a selling opportunity on more price weakness.

See on the daily bar chart for December soft red winter wheat futures that prices are trending down and last week hit a six-week low. See, too, at the bottom of the chart that the moving average convergence divergence (MACD) indicator is in a bearish posture as the blue MACD line is below the red trigger line and both lines are trending down. The bears have the near-term technical advantage.

Fundamentally, U.S. wheat regions have received very beneficial rains the past few weeks that set the U.S. crops up for a good start to their next growing season. And while the Black Sea region is seeing grain-shipping delays that have supported futures prices, the wheat in that region is still there. It’s not going away. Firms are figuring out other routes to get that wheat out of the Black Sea region.

A move in December SRW wheat futures below chart support at $6.80 even would become a selling opportunity. The downside price objective would be $5.90, or below. Technical resistance, for which to place a protective buy stop just above, is located at $7.18.

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): 

Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you. 

On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.