Wheat futures traded on the Chicago Mercantile Exchange (CME) is considered the benchmark for tracking wheat prices in general. It declined 1 per cent on Friday to close at 747.2 cents. For the week, wheat futures have tumbled 4 per cent.

Since peaking out in July 2012 at 947.2 cents, wheat futures went through sideways consolidation in the band between 850 and 900 cents till late November 2012. Subsequently, wheat futures breached its lower boundary and continued to trend downwards. On January 2, it fell by 3 per cent, decisively breaching its 200-day moving average and key support at 770 cents. It is hovering well below its 21- and 50-day moving averages.

However, wheat futures is presently testing its significant long-term support at 750 cents. Strong downward breakthrough of this support will pull the commodity down to 700 cents in the medium-term. Key support below 700 cents is pegged at 650 cents.

The daily relative strength index is featuring in the bearish zone and weekly RSI has entered this zone from the neutral region.

Likewise, daily moving average convergence divergence indicators is sloping downwards in line with wheat futures implying downward momentum.

On the other hand, an upward reversal from the current support level will be a corrective rally and the commodity can encounter resistances at 770 cents or 790-800 cents band in the short-term. Next important resistance is positioned at 850 cents. The commodity needs to emphatically advance above 850 cents to alter its ongoing medium-term downtrend and move northwards to 900 cents. Important resistance beyond 900 cents is at 950 cents.

Ever since bottoming out at the June 2010 trough at 425 cents, wheat futures has been in a long-term uptrend. This trend will continue to be in place as long as the commodity trades above its next significant support band between 570 and 600 cents. A decisive rally above 950 cents can take wheat futures higher to 1,000 cents in the long-term.

>yoganand.d@thehindu.co.in

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