SINGAPORE: CBOT July wheat is biased to break a support at $5.03-1/4 per bushel and fall to the next support at $4.94-1/2, as suggested by its wave pattern and a projection analysis.
These supports are identified as the 50pc and 38.2pc projection levels of an upward wave C from $4.66-1/4.
This wave was disrupted by a correction triggered by the resistance at $5.22-3/4.
The correction seems to have adopted a flat pattern, which consists of three waves.
The gain on Thursday may have been driven by the second wave labelled b, which would be reversed by a downward wave c.
A break above $5.12, however, would make this wave count questionable, as a bullish target range of $5.22-3/4 to $5.40-1/2 will be established then.
On the daily chart, wheat faces a resistance at $5.18-3/4, the 50pc retracement on the fall from $6.19 to $4.18-1/2. This barrier may trigger the second correction towards $4.95.
A break above the resistance will open the way towards $5.42-1/4.
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Wang Tao is a Reuters market analyst for commodities and energy technicals.
The views expressed are his own.
No information in this analysis should be considered as being business, financial or legal advice.
Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.
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