I'd like to introduce guest contributor Ron Lembo to Ponsi Charts. Ron is the manger of Sonoran Vista Group, LLC in Scottsdale, AZ.
Last week, the price of corn made a stunning move higher. Is this move sustainable, or is the price of corn likely to fade? Let's go to the charts to find out.
In the chart below, the yellow line displays the average price of corn over the past 5 years, and the blue line represents the current price of the September Futures contract. Notice how the price of corn has a tendency to drop during the months of July through September (yellow line).
According to Brownfield, an agricultural news publication, there is little change in the corn supply from one year ago. In addition, third quarter corn consumption is shaping up to be well below average.
Is the sharp price increase, as illustrated by the dashed green line, sustainable? It's doubtful, especially with the price action we're seeing in the U.S. dollar index.
From left to right, we see the 4-hour, weekly, and monthly charts of that index below.
Simply put, the buck is stuck.
The U.S. dollar index is trapped in a range. The boundaries of that range vary based on the time frame; on the four hour chart (left) the dollar is trapped between 96.40 and 97.80.
On the weekly chart, that range appears wider, but from every angle, the dollar appears directionless.
A weaker dollar would help propel corn and other commodities higher. According to the charts, we expect the dollar to stand its ground.
You can reach Ron Lembo at Rlembo65@gmail.com
Want to learn to read and analyze charts like Ed? CLICK HERE
The Link LonkJuly 09, 2020 at 11:04PM
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Is Corn Moving Against the Grain? - TheStreet
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Corn
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