Wednesday's much anticipated USDA crop report may be the fundamental catalyst for further development of the Channel Down chart pattern being formed by the market, shown here on the 240-minute time interval.
This chart pattern may still have a ways to go before a definitive breakout in either direction materializes, and the internals are still relatively soft, with an overall Quality measurement of only 3 bars. However, the support and resistance levels are already well defined, and anticipated volatility with the crop report has the potential to accelerate the pattern's completion.
A bullish report is likely to set the market in motion towards the upper end of the channel, which is currently favored by the recent reversal action near the lows at the support level. A bearish report may trigger a very early breakout to the downside, with ensuing forecast price targets at significantly lower levels.
Traders anticipating a move higher should watch the market action close to the upper trend line for guidance on market strength, keeping the option of exiting or reversing on a breach of the $7.50 price support.
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