The grain sector made a meaningful reversal in Tuesday's trading session, with the whole complex starting the day weak and then rallying into the close. This suggests the grains may have bucked last week's trend of keying off of the equity market stability for strength or weakness throughout the day.
Especially noteworthy on the technical outlook is the nearby corn futures, which tested the bottom end of a large Channel Up chart pattern during the morning sell-off. The Channel Up pattern shown here on the hourly chart has guided the market higher, with the price holding at the $7.00 per bushel level before the upswing was initiated.
This bodes well for the near term potential of strength in the corn market, which is likely to translate to strength in the broader complex as well. The swing low of $7.00 per bushel now becomes a pivot level for corn, with long entries positioned above it. If the channel continues developing, the eventual upside target would be the channel resistance near $7.40 cents per bushel.
If achieved, this would put the price back on track for a retest of the summer highs near $8.00 per bushel, and may establish last week's equity market related selling as a long term low for the corn futures.
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