Corn is in Limbo

• Posted by Greg Harmon
• on November 3rd, 2011

Summer has ended, we have seen frost in the mid-West and Snow in New York City. The seasons are changing fast so I guess it makes sense that Corn ($ZC_F) might be fading away, both from the supermarket and the grain market. But is it? Take a look.

Corn – Monthly

On the monthly chart above Corn may be putting in a Double Top. Evidence for a pullback includes the Relative Strength Index (RSI) trending lower on this timeframe as well as the Moving Average Convergence Divergence (MACD) indicator trending lower and recently crossing negative. The Simple Moving Averages (SMA) are all still sloping higher and below price illustrating the recent uptrend but last month touched the 20 month SMA for the first time since the move higher from 2010. Is it just consolidation in a bull flag before a move higher, or a Double Top. A break below the recent support at 575 would change the trend to bearish on this timeframe with a move over 800 changing the consolidation to an uptrend.

Corn – Weekly

Coming in a little closer to the weekly chart shows a similar picture. After reaching the top at 800 it has since retraced to support twice and held followed by a lower high each time. The RSI has been trending lower since the first peak and moved into bearish territory while the MACD has been negative for most of the year. On this shorter timeframe the SMA’s are also starting to roll lower. Another test of support would be the fourth and increase the chance of a break lower. But a break of the recent bull flag above the negative SMA cross could change that think with a move back over 775. For now consolidating but a slightly stronger negative bias than the monthly chart.

Corn – Daily

Finally zooming in to the daily chart the picture gets even a little more bearish. On this short time frame the SMA’s have all rolled over but the 20 day SMA is trying to push back higher now. The RSI fell into bearish territory on the last touch of support and is now turning lower after only making it back to the mid line. Even the MACD which has been positive has been fading lower since starting the bull flag, which is now getting a bit long in the tooth. It will take a move over 665 out of the bull flag to change to a positive view while a breakdown below 630 would suggest a test of 575 again.

The break out of a range and out of limbo for Corn looks like it will show up first in the daily charts and crescendo to the longer timeframes. This is one to watch the in the short term.

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