Late-day selling pressure sent the wheat market lower after posting new highs during Wednesday morning's session. The initial rally to nearly $7.40 per bushel at the open turned sharply lower, to create the upper boundary of a large Rising Wedge chart pattern.
This potentially bearish pattern, shown here on the hourly candlestick chart, may indicate a near-term top with more selling to come as the trading week progresses. The nearby wheat futures broke through the wedge's support trend line at $7.28 pr bushel at the close, setting the stage for a possible run to the projected downside forecast.
If carried to completion, this would imply a move to between $7.11 and $7.21 per bushel, which would be about half of the gains posted by the market so far this week. This may represent a healthy correction in the overall uptrend, with little long term technical damage done unless the selling pressure accelerates beyond the target level.
A reversal back into the wedge with trading above $7.30 would largely negate the breakout, with a move above $7.45 needed to trigger a reversal to the upside. Traders will be watching the outcome of this pattern for signs of a larger directional move on more prolonged time frames.
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