The cycle started at $8.44-1/2. It peaked around $9.01, a resistance established by a falling trendline. Three small waves will make up the current correction. So far, only two have unfolded. The third wave labeled c may travel to $8.75.
The cycle could be a part of a big wave C, which is capable of traveling to $9.24-1/2. A break below $8.75, however, would not only signficantly decrease the chance of the wave C extension, but also cause a loss to $8.63-1/4.
On the daily chart. Two bullish patterns are forming. One is a high-low bottom which developed from the Sept. 18 low of $8.26-1/4. The other is an inverted head-and-shoulders from the July 16 low of $8.36-3/4
Both of these patterns suggest a further gain to $9.16-3/4, the 38.2 percent retracement of the downtrend from $10.63-1/4 to $8.26-1/4.
* 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.