Wheat futures held a tight range to open the trading month of August, bouncing slightly shy of major support on the long term chart. Nearby wheat futures have been trading inside of a very large Triangle chart pattern, illustrated here on the 240-minute time frame. The narrow trading range keeps the market precariously close to the bottom of this pattern, which will be watched closely for a possible failure.
The overall duration as well as size of this formation may initiate a major trend shift once the market breaks out. Multiple retests of the bottom of the triangle near $6.70 per bushel have so far contained the downside moves, but rallies towards resistance have found early selling pressure.
A move below the $6.70 support would signal a downside breakout from the triangle, with a rally back above the trend line at $7.10 required to reverse the short term downtrend and propel wheat back into its previous bull market posture.
Given the near 40-cent distance between the top and bottom of the formation, range=bound trading may ensue for the near term as the pattern comes to a completion. However, an early breakout to either direction would likely magnify the move towards a new trading level.
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