We had a very constructive day for our short wheat position. Like the past 4 trading days, we made a lower high and lower low today. We closed under the 8ema and also under the 20sma. We closed near the bottom of the candle. We've had another good volume day relative to the entire past of the December contract. Stochastics are still in the mid-range. All this is encouraging for our trade.
The challenge now is the congestion we are in from 8/3/21 - 8/11/21. Also, immediately under this range is a swing high from 7/20/21. These conditions can act as support or glue going forward. If it acts as strong support then we'll bounce off this level, which is not desirable. If it acts like glue, then we'll trade sideways for days, and then, if we're lucky, we'll break down further, as we expect. Of course, we could cut right through this level like a hot knife through butter, or even gap down on Sunday night, and continue downward. We can't know which of these will be the case, so we have to hold onto our position and react to what we see next week.
I thought about taking a hedge for the weekend, but we're looking strong and have a 20 point cushion. If we gap down, or continue down quickly Sunday night, then a hedge would only hurt us. Plus we're using the mini-contract. So, I passed on taking a hedge.
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