WEAT is looking really good here, showing classic VCP characteristics with volume dry up prior to a move up. Whilst not a true high tight flag (77% increase in 20d rather than 100%) the correction from the high point of the flag pole (25%) does fit this particular trade set up. Price and volume have been tightening nicely in the flag, with increased volume and price drift since mid-May. In spite of an extremely red day for the wider market, WEAT managed to make a higher low, resulting in a downward trendline breakThe wider macroeconomic environment could help this trade immensely; the main wheat producers globally are China, Russia, the Ukraine, the US and the EU and each is likely to produce and/or export less for various reasons:
Russia/Ukraine: Account for 30% of global wheat production, the current war is likely to dampen production and exports
The EU is experiencing poor growing conditions with droughts and higher than average temperatures
There's also the issue of fertilisers, which require natural gas to produce (Russia is also the world's largest producer of fertiliser) and harvesting the crop, which requires oil - both are at all time high prices with no signs of coming down soon
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.