Trade War and Commodities - Technical Behavior Explained
First let's take a look what happened between China and United States.
FUNDAMENTAL VISION
-At the beginning of 2018, United States started a trade war with China, imposing tariffs on different products.
-In response to this measure, the Chinese government imposed tariffs on US products including some raw materials, the main product exported by the United States to China.
-In relation to this, there was an excessive decrease in exports, reaching the minimum quantity exported in the last 8 years.
-By decreasing the demand for products, this led to a decline in prices. In the case of soybean, we saw a few days ago how the price reached the minimum since 2008.
TECHNICAL VISION
WHEAT WEEKLY CHART
SOYBEAN WEEKLY CHART
-We observe that price behavior was pretty similar in both assets.
-In case of Soybean, the first down move was stronger than the Wheat, but then both of them started a similar consolidation/accumulation process to continue the down move.
-In the case of Wheat, price did a -18% movement since the previous Max., and then formed a flag pattern that lasted around 5 months. The breakout was perfect, and the bearish trend continued with a -16% movement. In total the downside movement of Wheat was around -28%.
-The first down move of Soybean, was around -24%. The pattern of consolidation was an ascending wedge for about 6 months, in which the movement after the breakout was slow at the beginning, but then it dropped on a -12% move.
FUNDAMENTAL VISION
-At the beginning of 2018, United States started a trade war with China, imposing tariffs on different products.
-In response to this measure, the Chinese government imposed tariffs on US products including some raw materials, the main product exported by the United States to China.
-In relation to this, there was an excessive decrease in exports, reaching the minimum quantity exported in the last 8 years.
-By decreasing the demand for products, this led to a decline in prices. In the case of soybean, we saw a few days ago how the price reached the minimum since 2008.
TECHNICAL VISION
WHEAT WEEKLY CHART
SOYBEAN WEEKLY CHART
-We observe that price behavior was pretty similar in both assets.
-In case of Soybean, the first down move was stronger than the Wheat, but then both of them started a similar consolidation/accumulation process to continue the down move.
-In the case of Wheat, price did a -18% movement since the previous Max., and then formed a flag pattern that lasted around 5 months. The breakout was perfect, and the bearish trend continued with a -16% movement. In total the downside movement of Wheat was around -28%.
-The first down move of Soybean, was around -24%. The pattern of consolidation was an ascending wedge for about 6 months, in which the movement after the breakout was slow at the beginning, but then it dropped on a -12% move.
