Market Watch - Wheat Short
It’s nearing the end of the trading week and with Non Farm Payroll figures out tonight there could be allot of volatility, especially in the Forex market. We need to take this into account as traders and manage our risk accordingly. We don’t generally like getting into new FX positions just ahead of Non Farm payrolls so we thought we would run you through one chart we do like the look of outside of the Forex market.
Wheat has caught our eye today as it has broken down through a prior level of support on the daily chart. If you take a look at the daily chart below you will see the level of support marked in by the blue line. This has been tested multiple times and in yesterday’s session we broke down strongly through that level. This level also happens to be last week’s low which helps to add to the significance of the level. If you have been reading our blog posts for a while now, you might know how we would look to trade a chart like this. Our preferred trade here would be to trade it short on a retest of the breakout level. Let’s drill down timeframes to explain this in more detail.
We have drilled right down to the 60 minute chart as it illustrates what we want to see clearly. As you can see price has been trending down nicely and we've had a very strong break of the level we saw on the daily chart one again outlined by the blue line. We have also drawn in a Fibonacci retracement to see if we have a cluster with the support level and what do you know, we are perfectly lining up with the 61.8% Fib. These factors start to really back up the support and resistance level. Therefore what we would like to see to gain an entry short is a retest of this level. If we can get a clean pullback back into that level we would view that as a great area to look to get short. We are expecting this support level to act as resistance and for it to be an area where the sellers step back in and outweigh the buyers.
As always make sure you keep a close eye out for how price reacts to the level outlined if we do in fact get a pullback.
Happy Trading!
Regards,
The TWP Team
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