IFC Markets - Analytics

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    Technical Analysis PCI : 2015-06-08

    Grains futures expand further

    Let us again consider the &Grain_4 personal composite instrument chart. It consists of the same amounts of wheat, corn, soy bean and oats (100 bushels per contract). As expected, the PCI is growing on bad weather estimations due to a probable impact of El Nino weather pattern this autumn. Last week wheat futures added 8.4% because of low crops forecasts in the USA. It has been the sharpest weekly increase since last November. Wheat head blight in Kansas produced additional support to prices. Wheat futures expanded further on Monday, followed by corn and soy bean. China built up soy import in May to 6.1mln tons – 2.7% surge, as compared to the previous year. Corn quotes were mainly dropping because of bird flue in the USA: 46mln chickens and turkeys died. Recently there has been developed an experimental vaccine, which may be approved by US Department of Agriculture (USDA). It is expected to stop the outbreak. USDA reports release is considered the most important event this week. The reading will contain forecasts for world crops and cotton production, reserves and demand. It may significantly affect the quotes. The information is expected on Wednesday at 14:00 and 14:15 CET.


    On the daily time frame the &Grain_4 chart has been indicating an uptrend. It has crossed two latest fractal highs. Bollinger Bands have not yet expanded but have a positive slope. The latest MACD bar is above the zero and signal levels, which is regarded as a bullish indication. RSI-Bars has also shaped a bullish divergence but has not yet reached the overbought zone. The momentum may continue, if another &Grain_4 bar closes above the upper Bollinger band, which is presently located at 377.5. The most cautious traders are recommended to wait for USDA report on Wednesday. A stop loss may be placed under the lower Bollinger band, which may now act as a support line, – at 353. Another convenient mark is located below the previous bearish trend line at 366. After pending order activation the stop loss is supposed to be moved every 4 hours near the next fractal low, following Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most careful investors may switch to the H4 time frame and place a stop loss, moving it after the trend. If the price reaches the stop loss without triggering the order, we recommend to remove the position: the market sustains internal changes that were not considered.


    Position Buy
    Buy stop above 377,5
    Stop loss below 353 or 366

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