Come harvest time, an ear of corn goes suddenly from standing tall to lying low. Corn’s price often follows a similar trajectory on its chart. Impressive spikes reverse themselves in equally dramatic fashion. Corn’s last major high in June 2008 was a classic example. Having sprouted 152 per cent in just eleven months, it underwent a 61 per cent threshing over six months. And since last June, corn rose some 140 per cent, halting around its 2008 highs at 776.

The fact that corn’s price has gone broadly sideways for several months rather than collapsing could be a positive sign. Such activity is more typical of a pause within an uptrend than of a top. However, it is significant that its rally has failed at its previous high, having become overbought on its monthly chart earlier this year. On prior occasions where it became similarly stretched, drops of as much as two-thirds ensued.

I would suspect that such a move were under way if corn’s 13-week exponential moving average now crossed below its also-falling 21-week exponential moving average. These two lines currently sit at 717.5 and 708.5 respectively. I would subsequently seek to sell short upon rallies that failed at one of those two lines.

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