Wheat futures triggered a technical sell signal ahead of Friday's USDA crop report in a move that may have given traders a head start if the release is viewed as bearish by the market. Autochartist had been tracking the development of a very broad descending triangle chart pattern on the 240-minute time interval when the support failed and triggered the breakout.
The decline below $6.29 per bushel violated the underside of the triangle to generate the sell signal. This breakout is occurring very early on in the formation, which gives the triangle more of a channel appearance as the narrowing of support and resistance had only just begun to materialize in the chart analysis. Nonetheless, the pattern scores well in uniformity and clarity with a strong momentum rank to accompany the breakout. The forecast generated by Autochartist suggests a continuation of Thursday's selling to reach the minimum target of $6.07 per bushel. Given that Friday's trading action will likely be more volatile than usual following the crop report, there is a strong possibility for a move lower to overshoot he minimum target and move into the $5.00 price handle to complete the breakout and establish a longer term downtrend. For further information on this and other Autochartist products, visit our website at www.autochartist.com