Disclaimer: there is risk of loss trading futures and options. Past performance does not necessarily indicate future results. This is our opinion and should be treated as such.

Why the alert?

Dec Chicago wheat is finding some life at a key spot.

We are showing bullish divergence on the RSI for the first time since those June lows.

Prices made new lows. The RSI did not. Often a potential sign of weakening downside momentum.

This is happening at a very key spot. We gave back 61.8% of the entire rally down to the June lows. Which is the most common retracement. We are also sitting right around peak volume.

If this market was going to find some life, this would be an area of interest.

However, there is plenty of downside risk if we fail to hold this level. For now it’s viewed as support, but we want to hold here.

The reason for this buy signal was largely what I’m seeing on the Chicago wheat chart. But this alert is also for the rest of the wheat classes.

KC Wheat is also right at the 61.8% level and high volume area as well.

This would be viewed as a must hold level. So keep that in mind.

This is where we want to see us bounce, but if we fail to hold this level there is plenty of air to the downside.

MPLS wheat also sitting right at the 61.8% level. This same level has been key support and resistance in the past.

MPLS is also showing bullish divergence on the RSI.

Prices made new lows. The RSI did not.

We like taking profits on short hedges if you have any.

We like re-owning wheat down at these levels.

Here are some options you could consider.

1) Sell a put

2) Buy a call

3) Buy futures with a stop in place if we lose this support

4) Sell a put to buy a call spread

If you have questions or want to put together an exact strategy that fits you please feel free to reach out to us anytime. As not all of these strategies are for everyone and offer different risks.

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