PCI on grain futures
Yesterday we analyzed the corn chart. As expected, the report released by the USDA encouraged a good rising movement of the price. Today we would like to focus your attention to &Grain_4 Personal Composite Instrument on the H4 chart. It reflects the price dynamics of the portfolio composed of 4 popular grain commodities: corn, soybeans, wheat and oats. USDA cut the forecast of US corn stockpile by 50 million bushels, to 1.777 billion at the end of the growing season 2014/2015 for the fifth consecutive time. It corresponds to the lowest limit of estimates by independent analytical agencies. The forecast of world corn crop was cut by 2.3%, wheat – only 0.07%, and soybeans – raised by 0.3%. It didn’t prevent wheat prices from growing by 4% in four days, and soybean prices from rising today. As market participants are concerned over a possible drought in the United States, which bolsters wheat prices, and floods in Brazil and Argentina might damage the soybeans harvest. Oats is rising for the third week in a row, along with beef and other meat types. Note that the USDA outlook of oats world production and crop hasn’t been changed compared to the previous report.
&Grain_4 shows signs of moving higher on the H4 chart and broke the level of the previous fractal high. Bollinger bands have already started to widen, but the price hasn’t reached the upper band. Note the reduced volatility on the MACD chart: it is above the zero level and the signal line, which can be considered a bullish signal. The RSI indicator is going up, but hasn’t reached the overbought level yet. We do not rule out the bullish momentum being developed after the last &Grain_4 candlestick will close above the upper Bollinger band, which is currently the level at 389.5. Stop loss is to be placed at the last Parabolic point, which can now act as the support line at 382.5. After pending order placing, Stop loss is to be moved every four hours near the next fractal low, following Parabolic and Bollinger bands signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets stop loss level without reaching the order, we recommend cancelling the position: market sustains internal changes which were not considered.
| Position | Buy |
| Buy stop | above 389.5 |
| Stop loss | below 382.5 |
Dear traders. For the detailed report of the strategy based on analytical issues of technical analysis click here.