Speaking exclusively to Miller Magazine, Eddie Tofpik, a master of technical analysis with nearly four decades of experience, reveals the art of interpreting price action, the importance of historical benchmarks, and the strategies needed to handle volatile grain markets in a time of global uncertainties.
Eddie Tofpik
Head of Technical Analysis & Senior Markets Analyst
ADM Investor Services International
In an exclusive conversation with Miller Magazine, Eddie Tofpik, Head of Technical Analysis at ADM Investor Services International and a renowned expert with nearly four decades of experience, discusses the critical role of technical analysis in understanding the dynamics of global grain markets. Tofpik highlights the enduring relevance of price action, stating, “Markets move in trends. If you do not believe in this, then to my mind, you do not believe in technical analysis.”
Explaining key market dynamics, he underscores the significance of historical benchmarks, such as the March 2013 high in European wheat, as tools for “interpreting what has happened, what is happening now, and what may be the opportunities in the future.” He also provides a detailed analysis of resistance levels in Paris Wheat, pinpointing the 240–247 range as a pivotal threshold that could reshape European wheat markets.
Tofpik underscores the value of technical analysis as a leading indicator in a time of global uncertainty, including geopolitical tensions and inflationary pressures: “The fundamentalist studies the cause of market movement, while the technician studies the effect.” With actionable advice for aspiring analysts, he stresses the importance of formal education and credible resources, encouraging newcomers to explore organizations such as the International Federation of Technical Analysts (IFTA) and the Society of Technical Analysts (STA).
Below are his responses to our questions:
Central bank policies, particularly those of the FED, affect grain markets. What specific macroeconomic indicators do you prioritize when analysing grain market trends?
Thank you for your interesting questions. As a technical analyst my role is to purely look and analyse the Price Action and by that, I mean the price of whatever I am asked to analyse, and where available, the Volume and Open Interest (some markets, such as OTC markets do not have these last two so on those, it is purely on price). Hence, I look at the grain futures markets, as that is what is traded. I do look at Fixed Income markets and provide analysis on those…but I do so purely on the same basis of Price Action.
In your presentation at Grain Academy conference in Varna, you highlighted various chart patterns, such as the Bear Channel in Paris Wheat and the Bull Channel in Chicago Wheat. Could you explain how you identify these patterns, and why they are significant for anticipating market movements?
This is an interesting question…and I put it down to two basics, what I call ‘truths’. The first ‘truth’, is that markets move in trends. If you do not believe in this, then to my mind, you do not believe in technical analysis. I sincerely do believe in technical analysis and I therefore look to see what are the trends, short…medium…and longer term. I rely on my decades of experience of using technical analysis (coming up to 40 years) to identify and utilise these trends. This is where the second ‘truth’ comes in. I very much believe that technical analysis is an art and not a science. The more you practice it, the better you can become.
You mentioned resistance levels based on historical highs, like the March 2013 high in European milling wheat. In your view, how relevant are these historical benchmarks in today’s volatile market landscape?
I believe that these are very relevant, especially when you have volatile markets as they are a building block on which you can interpret what has happened, what is happening now and what may be the opportunities in the future. From previous highs, lows plus congestion areas and zones, we can base what are the opportunities both higher and lower going into the future. To give you an example, my longest running Uptrend in any market I watch is actually in the grains. I have an Uptrend in London ICE UK Feed Wheat Futures that originates from 1975. It is still operational and is currently running at 98.70, which is well below the market…but was not so far below as recently as early 2016. From these building blocks, you can form a cohesive outlook for the longer term.
You observed significant congestion around 240-247 for Paris Wheat, indicating a challenging resistance level. What potential factors do you think could trigger a breakthrough, and how might this impact European wheat markets?
The 240 – 247 resistance area, is made up from congestion just below at 238 as well as the rising Neckline Extension to the June – November 2023 Head & Shoulders Top (currently 237) plus congestion at 242, the March 2013 high at 240, the February 2013 high at 247. More recent congestion from October this year between roughly 237 – 244 was created by these prior congestion levels when the market tried up there…and failed, turning lower. Now, we have had higher lows recently, with mid-November lows being higher right now, than the lows seen in late August, indicating a potential to test higher…but it all depends on that 240 -247 overhead area. If that is broken and not just breached, then potential could be as high as the 270 area. There is also an interesting Bow Tie formation of the Moving Averages just forming which, not to go too much into the theory about Bow Tie Formations…but it could mean a period of volatility during the week of the 9th – 16th of December.
With ongoing global tensions, especially around the Black Sea and the Middle East, what do you foresee as the biggest risks for global grain supply chains, and how can markets prepare for such disruptions?
I’m afraid I must here again refer to my earlier answer of being a technical analyst and looking at price action. I would only add what I recall one of the greatest living technical analysts, John J. Murphy, once said. It is along the lines of technical analysis is a leading indicator to fundamental analysis and the fundamentalist studies the cause of market movement, while the technician studies the effect.
Could the policy uncertainty associated with a Trump administration drive increased hedge fund activity in agriculture markets? What strategies would you recommend for traders to mitigate risks?
Access to hedging instruments today, has never been more readily available through various products, especially futures markets. I cannot recommend an individual strategy…but it is reasonable to pursue an active hedging approach, especially if as your question implies, we have policy or in truth, any other forms of uncertainty.
Given your extensive experience, what major trends do you see emerging in global commodities markets over the next five years, and what role will technical analysis play in predicting these shifts?
What I have seen over the last few years and what I think may continue for the next few years, is a constant and likely increasing attention to inflation. This attention to inflation will likely cause commodities as an asset class, to come forward as not only an important indicator of global trends but also as a subject for investment and overall scrutiny…so we should all possibly prepare for closer monitoring of what we do and how we perform. Where technical analysis can play a role is exactly as I said earlier. It will be a leading indicator in interpreting what is happening and the effects on price action in various international markets.
As an experienced technical analyst, what advice would you give to those entering the field of commodity market analysis?
I personally deem it essential to have an understanding of technical analysis to anyone entering trading commodity markets, whether it be for hedging or speculation…or both! To achieve that knowledge, it is not enough to just use the internet, as there are so many charlatans out there, dispensing all sorts of nonsense. I would suggest and urge anyone entering the field to seek good and true sources of technical analysis information that provide information, education, examination and accreditation in the field. To this this end, I would suggest looking at two sources. The first is the International Federation of Technical Analysts…or IFTA as it is known (ifta.org). This is an international not-for-profit body that is made up from individual technical analysis societies from around the world, so you can join a society in your own country. Alternatively, please look at the UK-based Society of Technical Analysts or the STA as it is known (technicalanalysts.com), this is also a not-for-profit organisation and is a founding member of IFTA as well as being one of the oldest and largest such Societies in the world. Full disclosure, I am a Director of IFTA and Chairman of the STA.
*Please kindly note that the views and opinions expressed by Eddie Tofpik in this interview are his own personal thoughts and reflections, and do not reflect the views of ADM Group.