It’s as easy as “ABC” – classic H&S failure in Corn

Often a pattern failure tells a better story than does a pattern completion.

This is just what we have in the case of new crop December Corn. As of last week it appeared that Dec. Corn was forming a H&S top pattern. On Wednesday, May 11, the market completed the top pattern (the “A” in the story). On May 12, the market had a minor upside reversal, but remained below the neckline. On May 13, the market poked back above the neckline intraday, but closed below the neckline. Then on May 16 the market spent the entire day above the neckline, followed by a strong gain on May 17. This is the “B” in the story and confirmation that a bear trap had been sprung.

I consider H&S failure patterns to be very tradable chart developments. The advance today, May 18, penetrated the May 10 right shoulder high and officially completed the failure pattern. This is the “C” in the story. Support should be solid at 664.

The target of 733 is based on projecting the distance between the April 26 high and the May 12 low (which is 69 cents) upward from the right shoulder high of 664. The market should probably not take out Wednesday’s low (652-3/4).

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