Wheat has broken out of its descending wedge pattern we had talked about last week and has the potential to send bullish vibrations through the entire grain complex given the pend up demand in the grains.
With this in mind, I have decided that the short position in the Soybeans has taken on to much risk and I have covered the short at break even.
This is a case in point of why it is necessary to follow an entire complex of related commodities and not just the one you are interested in trading. These complexes and especially the grains have a tendency of carrying each other regardless of the individual fundamentals and or individual technicals. So while there really is nothing new in Soybeans to warrant an exit of the short position, the potential bullish breakout in Wheat is enough to warrant a reduction in our risk levels with the Beans.
Now, should the breakout in Wheat prove to be a failure and we see its price move back into the wedge, then we may re-enter the Soybeans, but until this happens I am going to remain flat the grains.