As seen on the attached weekly chart for May canola, a troubling signal is also seen on the weekly candlestick chart, as indicated by this week’s red candlestick that resembles an inverted T, also known as a gravestone doji that often signals a market reversal. This candlestick is formed by this week’s open at $737/mt, a move to a record high of $782.90/mt, while the Feb. 25 close is at $735.20/mt, also equal to this week’s low.
By definition, the bulls dominated trade early in the week, while sellers have taken charge in the past two sessions. This candlestick often signals a trend change. Traders often look to volume charts to help confirm this signal, while after four sessions, the weekly volume is relatively close to the highest volume traded over the life of the contract, as seen in the purple bars of the first study.
The brown line on the second study of the chart shows a modest $1.50/mt weakening in the May/July futures spread over the week, while the spread continues to reflect a bullish $30.30/mt inverse after four days.
The lower study shows a bearish crossing of stochastic momentum indicators during the first four days of the week, although it is early to know if these indicators will continue to roll over to trend lower.
Cliff Jamieson can be reached at firstname.lastname@example.org
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