Corn Looks Wilted

Shorted March Corn near the close from 426 1/2 on the Daily chart. Here's what I saw:

• Bearish engulfing candle
• Close below 8ema
• 3 drives to a top
• Stochastics Overbought
• Negative Stochastics Divergence (NSD)
• High volume
• Corn, Soybeans, Soy Oil, Soy Meal, and Wheat all have short signals today.
• Full Moon

Considering today starts a Full Moon may seem like a joke to the uneducated trader. You'd be surprised how much work has been done on this subject. Its been shown there is a strong, but not perfect, correlation between full/new moons and the grain markets. There are correlations with other markets too. It works best at market extremes, not as well if the market is moving sideways.

I try to keep an open mind. If something works in the markets I want to use it. I don't care how crazy it seems. I'm not trading to be popular, I'm trading to make money. Ignore proven natural cycles at your peril.

The NSD can be seen if you notice the short white angled line segments spanning the last 5 trading days. One is over the candle tops and one is in the Stochastics panel on the bottom of the chart.

Since we haven't seen confirmation of a down move yet, I'm using the YC mini contract, which is $10/pt rather than $50/pt for the full ZC contract. If things develop properly I'll scale in with more contracts. 

Target 50% Fib 385 1/2

Stop 440

Risk: 426 1/2 - 440 = -13 1/2 * $10/pt = -$135.

Reward: 426 1/2 - 385 1/2 = 41 * $10/pt = $410.

R:R = 3:1 which is ideal.

The 440 Stop is just over today's high, which is also the high since the upswing started at 331 1/2 mid-August. If price gets up there something is wrong with this trade.

You might notice comments on the chart about retracements being less than 38.2%. I was looking for another Fib range to find some confluences but Larry Pesavento teaches that if a pullback doesn't reach 38.2% then don't consider it as a Fib range. So, using that rule, this has been one big upswing from a Fib perspective. That being the case, if we started a downtrend today, then we can expect a retracement of at least 38.2%, 50%, or 61.8%. I have found that 50% is most common in general trading.