Tuesday's bullish action in the grain markets set up a possible breakout from an emerging Rising Wedge chart pattern, illustrated here on an hourly time interval. After choppy mid-day trade, the nearby wheat futures surged to close on the highs just slightly above resistance established by the wedge.
Follow-through buying in Wednesday's session would initiate a topside breakout from the wedge with a move back above $7.60 per bushel. Overall strength in the grains combined with the resilience of the wheat futures amidst the broader market turmoil adds potential for this rally into a higher price level to materialize.
This pattern has been developing for a considerable time period over a large price range, which may portend a substantial move upwards if the pattern completes. A move back into the channel below $7.50 per bushel would shift the outlook to neutral, with a move back down to $7.05 or lower required to trigger a downside breakout from the wedge.
While the grain markets have begun to detach from outside influence of stock and currency swings, they remain susceptible to a return of severe selling in the major markets.
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