Wheat prices have dropped about 80 cents a bushel since the ‘spike high’ in early August made when there was some confusion about whether or not Ukraine would export the expected amount. Just prior to that we wrote in the August 1st edition that because wheat prices had broken up from a weekly-scale compression, it was time to trust the signal and assume that prices were going to climb more. That compression is now being re-tested, as shown in the first chart below and we expect to find good support hereabouts, as usual. There is also an equivalent daily-scale compression just here (see the second chart below) so this seems like a good time to buy some more wheat:
Meanwhile, there has been some US$ weakness and there may be about to be some more. The US $ dropped a bit against the Canadian $ in late July, breaking down from a compression. The price gradually regained the levels of the compression, found resistance there (as usual) and fell away again. Most recently, there have been a couple of new compressions which (so far today) are breaking downward. This looks like a new trend in the making and we would buy the Canadian$ near the close, assuming that the exchange rate remains below the compression toward the end of the session.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com
