What I went right?

Last week, I was busy preparing a presentation for another course, therefore I didn’t spare time for my blog. At the same time, I missed the opportunity of latest released report. Unfortunately, I went six long positions, which resulted in a big loss and I couldn’t get out of this bad situation. Until now, I am still looking forward to another chance to gain my money back.

On Nov. 9^th, 2012, USDA released the supply & demand report on three commodities: soybeans, corn and wheat. According to this report, US soybean production was 80 million above trade expectations and “ the jump in world ending stocks is a significant concern. As for corn, USDA pegged 2012/13 corn production at 10.725 billion bushels which was 91 million above expectations. However, all world wheat production was experiencing a downward trend, about 1.5 million from the October estimate. However, wheat and soybean are substitutes, the same trend for these days are common.

Daily Price Change

 The Road Ahead:

These days I For next week, I will focus on how to use technical analysis to forecast price. The technical analyst focuses purely on market information, but also volume and open interest figures.

Soybean:

From this chart, we can see that from August to now, there is a sign of inversed head and shoulder (Top). This involved three phases-the formation of the left shoulder, the head, the right shoulder. Therefore, I think there will be a upward trend in Nov. 14^th contract.

                         Left shoulder              Head Right                     shoulder

And also the above analysis can be confirmed by moving average analysis. Here are three moving average lines, which based on different year range. The most basic way to trade using just the moving average is to buy when the price of a commodity breaks above the moving average line.

Corn:

In recent days, the corn price fluctuates a lot. I cannot find any specific signs for future trend. Therefore it is hard to predict. Based on the former experience, in October, there was a similar slump and then back to the former level and then stayed stable for a while. Therefore I guess in the next few days, there will be an increase in price.

Wheat:

As for wheat, the price reached to the top in Nov and then showed a downward trend. At the same time, the open interest and volume is relatively high when compared with last few months, which shows a strength behind the downward trend. Therefore I think the July, 2014 trend will continue.

And from the moving average lines, we can see that the price of the moving average breaks below the moving average line, so sell the contract.

References:

http://www.agrimoney.com/futures.php?page=chart&sym=ZCN14

http://futures.tradingcharts.com

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