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Mascoutah, Illinois | Dave, if you take a look at the March corn chart we made a low of around $3.20 back in the late summer or early autumn of 2009. From that level, we rallied to a high of $4.25 five seperate times until we had this sell off. What we need to get a substantial rally in corn is to see almost every long position sold from $4.25 back down to $3.20 which is the support level. If we return to $3.20, we will probably see extreme pessism and almost all producers will be extremely unhappy and you will see pages of negative comments on this site. "The world is going to end. I am planting a crop that I am going to lose money on. When will prices stabilize? ETC." (You get my drift.)
At around $3.30, the pessimism becomes defeaning and the contrarians step in and start buying. Next, prices start to stabilize and slowly start to head higher. The next wave of buyers step in and now we have a rally. Finally, the momentum players and the speculators can't be left out so here they come piling in also.
Usually in every rally, we overshoot to the upside. Prices outweigh fundamentals. My OPINION is we take out the $4.25 resistance sometime in the last week of April or first week of May and challenge the next resistance level which is $4.52-$4.53. What trend tends to help commodities in the second quarter of each year is the dollar starts to weaken in the early part of March. (Historically speaking, the dollar is the strongest between December and February.)
If you have anymore questions, please feel to ask or you can email me? I hope I was able to help you understand by explaining this process in a constructive way. | |
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Illinoisfan
