Opening Calls
Corn: down 2 to 4
Soybeans: down 6 to 8
Wheat: down 1 to 3
Tech Talk from the Tech Guy
22 February 2022
We are leaving the March contract and rolling (moving) to May contracts in all grains because that is where the trading volume (largest number of contracts traded) has moved.
Below is the daily continuation chart in soybeans.
As mentioned last week, we were looking for beans to test $16.33. It ran through that price by 8½ cents today and settled 2 cents above it at $16.35.
When a level of resistance is broken ($16.33 in this case), that area of resistance becomes an area of support. So, now, we will see if $16.33 to $16.30 functions as support. The next level of support is $16.12 to $16.10 and then $15.91.
Those levels of support are places where technicians will be placing buy orders. The safest place (the least likely place to lose money) to buy is the lowest level of support, but that price is usually not reached because there a two levels of support above that “safest” buy area.
All of the above applies to people trading futures. What does all this technical stuff mean for those of you with beans in the bin or on basis contracts?
You want those levels of support to hold. Don’t panic sell if the first level of support is broken… don’t even sell if the second level of support is broken. After all, May beans were up 80 cents since last Tuesday!
But, each day, pay attention to how many levels of support are broken before the market resumes its uptrend to gain a perspective on the strength of the bull move (higher). Over a period of months during an uptrend, more levels of support will be broken as the bull loses its energy and it will be slower to make new highs after breaking progressively more levels of support. Eventually, there will not be enough energy to make new highs. Before that happens, you will be warned of the dying bull by the progression of broken levels of support and how quickly the market recovers.
If May beans do not trade below $16.33 tonight and tomorrow, this is one strong bull and get out of the way. If May beans trade down to the second level of support and it holds, your bull market is still in good shape. If it trades down to the third level of support and cannot settled 10 to 20 cents above it tomorrow afternoon, this bull market needs a rest and a larger correction lower would be in order.
I have marked the legs with numbers. Legs can be called waves also, from Elliot Wave - It is somewhat subjective.
My data suggests we are beginning a 3rd leg or 5th wave up. Each leg up has a small down correction. The corrections are labeled 2 and 4.
Therefore the market has just begun the 5th wave UP in my estimation. A conservative target for this new wave is $18.00 based roughly on the lengths of the previous legs or waves up. Up trends can terminate with 5 waves or they can extend to 9 to 13. We will keep watching and counting.
There are other labels and numbers on chart including the rough gap target of $19.46. The point is to have several marks above and below price to manage your business risk.
May wheat support is $8.39 and $8.21
May Corn support is $6.69 and $6.60.
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