Technical Analysis #C-OATS : 2019-08-02

Higher export expectations bearish for oats

USDA forecasts increased Canadian oats exports to the United States. Will the oats prices continue declining?

The US Department of Agriculture forecast 20 percent expansion in global oats trade by 2019/20, due almost entirely an increase in Canadian exports to the United States. Canada now supplies 95 percent of total oats imports for the United States, according to Grain: World Markets and Trade report of USDA. As a result of uncertainty in rapeseed trade with China, some growers have shifted away from rapeseed to grow more barley and oats. And a jump in Canadian oats production and subsequent expansion in exports will go to US market in the south. Higher supply estimates are bearish for oats.

OATS:D1 is falling below MA(200)     08/02/2019 Technical Analysis IFC Markets chart

On the daily timeframe the OATS: D1 is below the 200-day moving average MA(200) which is declining .

  • The Parabolic indicator gives a sell signal.
  • The Donchian channel indicates no trend yet: it is flat.
  • The MACD indicator gives a bullish signal: it is below the signal line and the gap is narrowing.
  • The RSI oscillator is rising but is below the 50 level.

We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 257.4. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upped Donchian boundary at 273.1. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (273.1) without reaching the order (257.4), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

OrderSell
Sell stop Below 257.4
Stop loss Above 273.1

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