Daily Commodities Update: Wheat

Grain market futures surged higher to open the trading with solid gains across the complex. Wheat futures led the rally, picking up around 30 cents per bushel after holding key support on the chart. The reversal action from last week’s soft close coincides with the neckline of an “Inverse Head & Shoulders” chart pattern, shown below on the longer term 240-minute time interval.  

This is now a well established support level for the nearby Wheat futures, and the firm rebound suggests a retest of the resistance created by the Inverse Head & Shoulders chart pattern may occur in this week’s trading. A successful retest with a close above that resistance, currently near $8.10 per bushel, would confirm this as a reversal pattern and encourage a move higher out of the formation.

Sideways trade between the support and resistance levels is possible while the longer term direction becomes clear for traders, meanwhile this pattern establishes a well defined level at which to buy support, sell resistance, as well as cue for potential breakouts in either direction. Given the overall formation with the underlying strength, the bias for now is to anticipate an upside breakout, with a close below the $7.20 per bushel level needed to negate the bullishness of the trend.

(Source: http://www.commoditiesmansion.com/general-commodities/daily-commodities-update-wheat-3/)