Wheat futures set up for a short entry after a textbook failed approach to a long term resistance level. The Key Level identified by Autochartist and illustrated here on the hourly candlestick chart held the market and broke the momentum of the rally.
As the price fell to the top of the forecast range from an earlier breakout pattern, the technical retracement carried the nearby wheat futures back to the Key Level at $6.31 per bushel. This was met immediately by heavy selling pressure, and the market managed one final thrust over the level before capitulating to the bears.
Wednesday's sharp pullback brings the price back to the upper end of the previously projected range. With the resistance level now firmly established as major obstacle on the chart, a continuation of the sell-off may drive the rice towards the bottom end of the range at $5.93 per bushel.
A revision to a bullish outlook would require a move back above the key level swing high, with the likelihood of such an outcome diminishing as the price moves further towards new lows.
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