SINGAPORE: CBOT wheat could test resistance at $8.01-3/4 after its failure to break support at $7.65-1/2 per bushel.
The failure coincides with bullish divergence on the hourly RSI. Together they suggest the formation of a bottom around $7.65-1/2.
A further bounce is highly likely after the downtrend has become exhausted. A break above $8.01-3/4 could prompt a gain into a range of $8.24 to $8.60-1/4.
A break below $7.65-1/2 could open the way towards a range of $7.07-1/4 to $7.36-1/2. On the daily chart, the contract opened sharply higher on Monday after the big black candlestick appeared on Friday.
Bears seemed to be bluffing within a contracting wedge, which could turn out to be a bottom pattern.
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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.