Technical Analysis November 14, 2011

Corn

Last week, corn firstly went up, peaked at 666 on Nov.9, then it turned down since then and settled at 638.4, with a -14cents change. Today corn kept its downward trend and settled at 633.4. From the view of RSI, which is 41.85 now, the market is relatively neutralize. However, the fast moving average is below slow moving average, which means the market is bearish. In addition, the fast MACD just crossed the slow MACD, which is a strong signal of the bearish market. Since the price decreases with a decreasing open interest, the market is strengthening. Also, since both the volume and open interest are decreasing, the market is now in congestion phase.

Reference: http://futures.tradingcharts.com/chart/CN/

Soybean

Soybean today has a strong increase when market opened. Today’s highest price is 1181 and lowest is 1168.6, and it settled at 1172 when market closed with +6.0 change. Fast moving average is below slow moving average, which indicates the trend is DOWN. And the MACD is also in bearish territory because the fast EMA is below the slow one. Price increases with decreased open interest, which means the market is weakening, and falling volume and falling open interest depict a congestion phase. RSI is in neutral territory, According to technical analysis of TradingCharts.com, there’s potential market rise coming by Stochastic indicator.

Reference: http://futures.tradingcharts.com/chart/ZS/

Wheat

Last week, the price of wheat only increased on Monday and Tuesday, which reached the highest price on Tuesday at 657. After that it turns out to decrease day by day in the rest of last week. The price trend was very similar to corn. The Simple Moving Average was a little bit confusing since all of the fast moving average and slow moving average converged from the middle of Oct. The fast moving average crossed the slow moving average from the above on Nov 10, and the fast moving average kept decreasing until now, which indicates that the market is in bearish mode. MACD indicates clearer price trend since the fast moving average are crossing the slow moving average from above in these few days, which indicates that the market is bearish as well. The RSI is 42.07, which the market is neither overbought nor oversold. Since the price decreases and open interest decreases, the market is strengthening. Since both the volume and open interest decrease, the market is in a congestion phase.

Reference: http://futures.tradingcharts.com/chart/ZW/

Volume & Open Interest

Open Interest is the total number of contracts that have not been settled from the previous day. Large number of open contracts indicated increased activity (large amounts of buyers and sellers) and increased liquidity. Its use in the market as a technical indicator works as follows : Price increases as open interest increases, market is strong – money is flowing into the market Price increases and open interest decreases, market is weakening Price decreases and open interest increases, market is weak – the market is liquidating. Price decreases and open interest decreases, market is strengthening

Open Volume

Traders will receive the most benefit when there is high liquidity in the market. Volume moves up and down in the month, it increases in volume as contracts move from 1st to second month out traders then move closer to the delivery month, so volume increases over time, but consequently volume declines as the delivery date gets close. A rising volume and a rising open interest are confirmation of a trend. A rising volume and a falling open interest suggest position liquidation. A falling volume and a rising open interest point to a period of slow accumulation. A falling volume and a falling open interest depict a congestion phase.

Reference

http://en.wikipedia.org/wiki/Open_interest http://www.investopedia.com/articles/trading/03/102203.asp#axzz1dkK24ZFP