Wheat trades limit up two days in a row with skewed risk-to-reward profile
Wheat prices have escalated as the Russian invasion of Ukraine continues. Prices have traded limit up two days in a row and three times since the invasion began. Both Russia and Ukraine are major exporters, with Russia contributing to 17% of the international wheat trade and Ukraine at 12%. (cnbc.com). The weekly chart below shows that wheat gapped up on open, and the long blue candle suggests an emotional commitment to the buying over the week. The stochastic (blue line) has turned up, and prices are likely to continue appreciating if it reaches the 80+ areas (green rectangle). However, the RSI is overbought (blue rectangle) and suggests that normalisation in the price is due. Given the strong emotion, as reflected in the real body of this week's candle, it is unclear how soon a pullback will occur. This conflict raises a problem for market participants as they grapple with an overbought market or ponder higher prices. In our opinion, and on a risk-adjusted basis, market entries at current levels have a skewed risk-to-reward profile. As such, caution is warranted.
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Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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