Technical Analysis Points to a Buying Opportunity

The December soft red winter wheat (ZWZ26) futures are showing signs of a fledgling uptrend, having recently hit a two-week high. The daily bar chart for December soft red winter wheat futures reveals that prices are in a strong upward momentum, with the moving average convergence divergence (MACD) indicator nearing a bullish line crossover signal. This indicates that the blue MACD line is trending up and poised to move above the red trigger line very soon, giving bulls the overall near-term technical advantage.

Fundamental Analysis: Reduced Global Grain Supplies

The fundamental analysis of the wheat market points to a significant reduction in wheat supplies coming out of the major global grain-producing region around the Black Sea due to the Russia-Ukraine war. Other global grain-producing regions have also experienced adverse weather conditions that have impacted crop growth. This reduction in global grain supplies is likely to lead to higher wheat prices in the near term.

Key Resistance and Support Levels

A move in December SRW wheat above chart resistance at the overnight high of $6.95 would become a buying opportunity. The upside price objective would be $8.00 or above. Technical support, for which to place a protective sell stop just below, is located at $6.50. It is essential to note that any trades discussed are hypothetical in nature and should not be considered as investment advice.

The Commodity Futures Trading Commission (CFTC) has issued a warning about the volatility and risks associated with commodity futures and options trading. It is crucial to understand the risks involved and thoroughly review the risk disclosure documents provided by your broker before investing in commodity futures or options contracts.

Jim Wyckoff, the author of this article, did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes.