Don’t Have Tunnel Vision…

The grain markets tend to be highly correlated. A good day in wheat is usually a good day in beans and corn, but not necessarily so.

Even though the correlation is strong, the tone of the markets can be quite different. Often when you are watching them, you get the feeling that one of them is being dragged along reluctantly by the strong performance in one of the others.

For a few months now, wheat has been the most dynamic market in the grain complex. Nevertheless, it pays to watch the other markets as well.

When I trade, I’m looking for breakout opportunities developing early in the session. Here are screenshots of the opening spell today for wheat, beans and corn. Which one would you rather trade?

Wheat 

 

wheat.png

 

Beans 

beans.png

 

Corn 

corn.png

Wheat is a messy opening, with no clear cut break out opportunity. Beans and corn both present nice opening continuation patterns.

However, beans has the shape best conforming to the patterns I use and also the greater range, meaning that you will not have to take as many contracts in your position.

Had you traded the early beans breakout, you would have banked a substantial profit in just six minutes! If you had been fixated on the "hot" wheat market, and forced a trade, it could well have turned out to be a loser.  

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