The daily chart of Lumber has been ranging between 217.00 and 197.30 as prices congest. This congestion has squeezed the intraday time frames into narrowing ranges that are setting up an Autochartist Initial Movement/Momentum (AIM) entry. Ideally, an AIM entry would capitalize on a breakout or breakdown through a Rectangle or Triangle pattern; however, due to the move lower intraday on July 27, the 60-minute time frame has formed a shallow Falling Wedge pattern.

Commodities Update

The market direction for this Falling Wedge is an accumulation cycle (as identified by the low, three-bar Autochartist Initial Trend reading) which set up the downtrend line breakout as a buy when prices rallied through resistance at 202.80 (E). Near-term resistance is likely to create selling pressure on Lumber given the low bullish momentum that accompanied the pattern break, as seen by the one-bar Breakout reading. Since the momentum behind the pattern break was low, prices could exhaust in the near-term at 204.30, which would prevent a quicker move higher towards the Forecast area waiting between 204.77 and 206.63 (F).