Wheat has had a nice bounce for traders playing the pullback to long term support at the up-sloping 23 weekly price channel.
However, there are some warning signs pointing to a imminent pullback.
1 - As you can see on the chart, there is divergence with Oscillators and price. Also, the May high at the 550 level was sold heavily last week.
2 - We'd note that this recent 10 day 70cent rally, places us in the 85th percentile of all 10day advances going back to 2008. While not a sell signal in and of itself, it tells us we reached the upper limits of observable 10day rallies.
3 - Commercial Traders have been sellers during the past 2 weeks, selling over 20k contracts. This places their 18month position score at a extremely bearish 1%. 20 days forward price distribution favors bears by odds of 2:1 given this setup.
With all daily trends across 4/9/23 days firmly up we don't recommend shorting this strength, however we are stalking for any signs of short term reversal. We are waiting on another failed rally attempt over 540, and reversal back lower - If we get this, short 540, with stops/hedges at 555 - Look to ride lower to the 500 level for R/R of 2.7:1