Trade Recommendation: Wheat
Wheat (WHT/USD) started to show bearish signs in May 2014 when it generated a lower high of 7.4350. Things took a turn for the worse when the market broke below critical support of 6 in June 2014. From that point, WHT/USD created a series of lower highs and lower lows until it bottomed out at 3.6125 in August 2016. In a little over two years, wheat shred 50% of its value.
A month after bottoming out, wheat started to create a base at 4. The commodity hovered above the support until July 2017 when it surged to 5.6275. Bears repelled the advance and sent the market tumbling down to 3.9425 in August 2017. Bulls mounted another rally to take out resistance of 5 in March 2018. While bears managed to hold on, it appears that they may not be able to withstand the next rally.
Technical analysis show that wheat seems to be creating a symmetrical triangle pattern on the weekly chart. The pattern emerged after the commodity generated a bullish higher low setup at 4.4125 on March 29. With this setup, the next leg up might finally take out resistance of 5.
The strategy is to buy the breakout at 5. If bulls complete the breakout, they may use it to create a base at 5 before climbing to our target of 6. The process may take more than six months.
Weekly Chart of Wheat on Forex.com
As of this writing, the WHT/USD pair is trading at 4.7775 on Forex.com.
Summary of Strategy
Buy: Breakout at 5.
Stop: 4.78 after the breakout.
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