The price of lumber finding some support buying near the 200 day MA today.
The price of lumber reached a peak at $1733.50 back in May. Since that time the price has moved sharply lower to a low last week of around $813. That was just below the 61.8% retracement of the move up from the April 2020 swing low which comes in at $817.60. Key level.
The sharp tumble to the downside also took the price to and through its 200 day moving average currently at $865.60 (green line). That moving average was broken last week and the price has traded above and below it over the last five or so trading days. Today's low reached around $860 which was just below the moving average level, but the price has since moved back above the level, and currently trades at $889.
Taking a broader look of the daily chart, there have been a number of swing levels between $776 and $921 (see green numbered circles). The swing highs over the last five trading days has stayed below the upper extreme. Stay below keeps a lid on the contract. Moving back below the 200 day MA increases the bearish bias, and should lead to a retest of the 61.8% retracement.
However, a move above $921 should solicit more upside corrective probing of the sharp move down. On a break above, the 50% midpoint of the same trading range since the April 2020 low comes in at $992.50 and would be the next key upside target.
For now, the pair waffles above and below the 200 day moving average and in the wide, but real, swing area.
PS the low for 2021 comes in at $634.70. Inflation hawks would lose more of their concern if the price can turn negative on the year.
