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Chart of the Day: Consolidation Near Bottom of Range in Corn Futures

Two things to note on this chart of Corn futures: 1) The clean failure test above the summer’s highs, followed by a sharp selloff to the bottom of the range. 2) Price is unable to rally strongly off of the support at the bottom of the range. This shows a lack of buying support, and sets up a good trade on a potential break below the bottom of the range. Note that this breakdown, should it occur, is another nail in the coffin of the summer’s strong uptrend—this would be a serious challenge to trend integrity.

This is one of the advantages to understanding a set of trading patterns as I outline in the the book. Whether you trade them as actual trades or not, they provide a good framework for market analysis and also give good insight into the balance of buying and selling pressure in the market at any time.

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AdamHGrimes

Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.