Kansas City/Chicago Wheat Spread: Return of the Bull

Trend Change

For the first time in over three months, the September Kansas City/Chicago wheat spread made a two-day close above the declining 30-day Moving Average.  This triggered the blog’s buy signal.  In addition, the spread cleared near-term price resistance at the mid-June bounce high.  This altered the previously bearish pattern of lower lows and lower bounce highs.  It appears that the bottom is finally in.

September Kansas City Chicago Wheat spread daily

September Kansas City Chicago Wheat spread daily

The IMC blog initiated a hypothetical long position in the September Kansas City/Chicago wheat spread at yesterday’s closing price of -13 3/4 cents (premium CBOT wheat).  Initially, it is being risked to a two-day close below -32 cents (premium CBOT wheat).

If this really is the trend change we were hoping for, we would like to increase the position size.  However, we will wait for the spread to confirm our opinion.  To do so, it would provide buy setups at higher levels than where we just entered.  This is because it will take a pattern of higher highs and higher lows to define the spread as being in a new uptrend.  So be patient and wait for confirmation before pyramiding your position.

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