Technical Analysis #C-WHEAT : 2016-02-19

Dry weather in India

Egypt recently has clarified its policy for acceptable fungus contamination levels for wheat shipments, which should increase exports to Egypt. And dry weather during growing season and forecasts of rain during harvest may negatively affect wheat crops in India. Will the wheat price continue upward correction following the forecasts?
Stricter norms of Egypt’s quarantine authority about zero tolerance level for ergot common wheat fungus in import shipments resulted in a fall in wheat imports by Egypt, the world’s largest wheat importer. The quarantine authority issued a second rejection letter for a Canadian wheat shipment on February 8 after rejecting a French shipment of 63000 tonnes of wheat in December. Another bearish development for wheat was the raising of world wheat ending stocks forecast to 238.87 million tonnes for 2015 -16 season by US Department of Agriculture in its last World Agricultural Supply and Demand Estimate report. In a positive development recently Egypt has put into writing its new policy for accepting trace amounts of ergot fungus in wheat shipments. This should provide clarity on acceptable product quality and result in higher wheat exports to Egypt. At the same time dry weather has raised concerns about wheat yields in India, and forecasts of rain during harvest add to concerns about lower crops in India, which may boost wheat prices.

USDJPY

On the daily timeframe WHEAT:D1 has been correcting upward after declining since the start of February. The Donchian channel is tilted downward. The parabolic indicator gives a sell signal. The RSI oscillator is edging lower. The price is edging higher after forming a double bottom pattern and has exceeded the last fractal high, which are both bullish signals. The MACD indicator is above the signal line and the gap is rising, which is a bullish signal. The bullish momentum may continue after the price breaches the resistance line and closes above the Donchian channel at 485.3. A pending order to buy can be placed above that level. The stop loss can be placed below the last fractal low at 458.8. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the profit/loss ratio to the breakeven point. If the price meets the stop loss level at 458.8 without reaching the order, we recommend cancelling the position: the market sustains internal changes which were not considered.

Position Buy
Buy stop above 485.3
Stop loss below 458.8