Posted by: usset001 | November 10, 2010

Key Reversal in the Corn Market

I am not known for my prowess in the use of technical trading tools, but I do know my definitions. Yesterday was a “key reversal” day in the corn market. A key reversal is a trading pattern that may signal (note the modifying “may”) the reversal of a trend (in this case, an uptrend). In a bull market, a key reversal occurs when prices hit a new high, but close near the previous day’s lows. Many people think of it as “a higher high, a lower low, and a close below yesterday’s close.”

Yesterday’s price action fit the definition. Dec’11 corn traded as high as $5.65, a life-of-contract high. It closed at $5.5225, below yesterday’s close of $5.53 per bushel.

One caution on the use of technical trading tools: I like to tell people that technical tools work very well, except when they don’t.


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