Wheat futures (symbol: W) have rallied nicely from the $5.50/bushel level at the end of Jan14. Even more impressive is the manner in which Wheat has spent the last 4 weeks consolidating, AND holding on to much of the gains achieved in the rally from the $5.50 level. Notice the breakout from the channel formed by the Jul12 – Jan14 price action.
We expect the rally to continue, ultimately testing the long running downtrend line originating with the Feb08 high of $13.3825/bushel. Given the necessary time to develop, that intersection should occur in the $7.50-7.80 range. Trade at and around that long running downtrend line will be a major decision point for Wheat …. time will tell.
Major support lies in the $5.50/bushel range. Major resistance will be met at the long running downtrend line.
Murphy & Co’s Wheat model is currently long. To learn more about Murphy & Co’s position models, visit http://murphycofutures.com/position-models/.