Corn Technical Trade
Since last year’s spike in corn prices US farmers believed they have struck gold. More acres were dedicated for corn plantations but with the increased supply and no imminent threats such as weather conditions, commodity traders sold Corn by the masses.
We believe the current global weather conditions is evolving into the extreme. Global warming or other scientific reasons does not alter the fact natural disasters are on the rise. It is merely a matter of time before a price surge will take place (similar to Coffee) in global markets. Relating to corn, the recent heavy selling may have painted a right-hand shoulder of a reversed Head-And-Shoulders (H&S) on the weekly chart.
(Click on image to enlarge)
As similar pattern was noted in USDJPY monthly chart before the mass rally from 77.86 to over 105.00. A technical signal will be given when the 21 weekly moving average (WMA) crosses the 500WMA (in blue) but we estimate the current levels to be a fair entry for a medium-term trade. The 100% objective of the potential reversal is seen at 620, however, we will set our target prior to the objective, which if triggered will allow us to revise a new entry to join the uptrend of the commodity. We are entering the trade bearing in mind ant return on the investment will be seen in the medium term.
Corn Trade Details
Corn long @ market price (447.38)
Take profit: 520
Protective stop: 422
Estimated duration: 60 days
Risk Ratio (RR): 1:4.8 (approx.)
19/06/14 UPDATE: Corn is trading at 450.52 at the time of this writing. We liquidate 10% of the trade at market price.
30/06/14 UPDATE: We were stopped out on our long trade in Corn. At it high’s Corn traded at 457.[lastupdated format=”F j, Y \a\t H:i T”]