A bullish USDA crop report released before the start of trading on Thursday helped the grain complex shake off the downward spiral that started with equities taking last week. While soybeans, corn, and wheat pushed back to their pre-decline levels, the nearby CBOT Oats futures were sent briefly to new highs.
Oats have been holding up better than the rest of the complex overall, with the price action forming a large Rising Wedge chart pattern on the 240-minute time interval. The upper boundary of this pattern was penetrated intra-day following the report, where some selling pressure brought the market back inside the wedge.
A resumption of Thursday's rally with a challenge of the high near $3.50 a bushel would signal an upside breakout, with a projected forecast well above this high. As the wedge has narrowed considerably since its development, a minor retracement below the support at $3.35 per bushel would trigger a downside breakout. If this does occur it would call into question the likelihood for oats to sustain the current uptrend, and invite a retest of the support at the base of the wedge near $3.20 per bushel.
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