I will try to analyse March 2013 contract reading the commentary for 26th of Oct on TradingCharts.com. This is designed solely as a training tool for the understanding of technical analysis of the financial markets. Even if I don’t have any training in technical analysis, I will challenge myself to try to understand the trend of this contract. I picked some of the indicators from the technical analysis and I observed different “opinions” from each of these indicators.
On short term corn price will go down, but on the long term corn price will go up. In the meantime, the price trend is down but a possible market rise is coming. That’s way closing a short position is recommended only if another indicator also tell to.
The trading volume is lower, which will lead to a decreasing in price. This is sustained also by DMI indicator.
The rate of exchange indicate an oversold market: the price of the asset is becoming undervalued and may represent a buying opportunity for investors.(http://www.investopedia.com/terms/o/oversold.asp#ixzz2AfUkthjN)
A choppy market is predicted which means that prices swing up and down considerably but with no resulting overall price movement in either direction.(http://www.investopedia.com/terms/c/choppymarket.asp#ixzz2AfVQYk3T)
From this technical analysis and the graph I may conclude that the price trend is down and short contracts are going to bring positive profits.
Here is a summary of the indicators I choose from the technical analysis: (http://futures.tradingcharts.com/intraday/CN/33?anticache=1351497886)
Mov Avg 3 lines Indicator:
Note: In evaluating the short term, plot1 represents the fast moving average, and plot2 is the slow moving average. For the longer term analysis, plot2 is the fast moving average and plot3 is the slow moving average
Short Term: The market is bearish (commodity will go down) because the fast moving average is below the slow moving average.
Long Term: The market is bullish (commodity will go up) because the fast moving average is above the slow moving average.
Mov Avg-Exponential Indicator: Price is below the moving average so the trend is down.
Stochastic – Fast Indicator: The stochastic is in oversold territory (Slow K is at 17.24); this indicates a possible market rise is coming. The long term trend is DOWN. The short term trend is DOWN. Don’t be fooled looking for a bottom here because of this indicator. Exit short positions only if some other indicator tells you to.
Volume Indicator: Volume is trending lower. In general this is bearish (commodity will go down).
ADX Indicator: The long term trend, based on a 45 bar moving average, is down. A falling ADX indicates that the current trend is weakening and may possibly reverse. Look for a choppy market ahead
DMI Indicator: DMI is in bearish territory (commodity will go down).
Rate of change Indicator: Rate of Change (-1.73) is below zero, indicating an oversold market.
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