Market Watch – Corn Short

After doing a full scan through the Forex and Futures markets, there’s one chart that is particularly stands out which we thought we would alert you to and that chart is Corn. Before you start reading on we recommend you open up your charts and take a look at the Corn chart and try to work out what type of entry you think we may be looking for on this market. It’s all very well us showing you what we are looking for but you’ll learn allot more if you also get involved in analysing the charts with us.

So let’s start out by taking a look at how the daily chart is shaping up which is shown below. You can see that price has been consolidating for a number of weeks without a huge amount of movement. However in the last three days we have seen some momentum gather to the downside and Corn has moved below the consolidation range. The Corn daily chart is now in a clear downtrend after making lower highs and a recent lower low. Price is slightly overextended from the moving averages after the strong move down so we would ideally be looking for a pullback type trade to alleviate any buyers left in the market.

Due to the overextension on the daily chart, ideally we would like to look to short Corn once a pullback has occurred on a lower timeframe. This makes sure we don’t get into a position while the markets overextended as the further the market moves away from those moving averages the more likely it’s going to snap back. What we have done is drilled right down to the 60 minute chart to search for an ideal price level that we think price might pullback to and find resistance at. As you can see below we have drawn in a Fibonacci retracement from the most recent high to the most recent low in price and the previous low lines up  with the 50 – 61.8% Fib “sweet spot”. This starts to indicate that perhaps the 376 – 375 area will act as a point where price may find resistance if retested. This level also happens to lineup with the level drawn on the daily chart which supports the trade plan even more.

So if price does retrace to the level outlined we will see that as a great spot to be looking to gain an entry short in Corn. Be sure to keep an eye on Corn’s trading activity in the next 24 hours to see if this scenario does in fact play out.

Happy Trading!

Regards,
The TWP Team