These supports are identified respectively as the 38.2 percent and the 23.6 percent retracements of the downtrend from $5.38-1/2 to $5.01-1/4. The retracement analysis reveals a resistance at $5.24-1/4, around which a five-wave cycle from $5.01-1/2 ended.
The completion of this cycle is expected to be followed by a decent correction which may at least extend to $5.15-1/4. On the daily chart, wheat failed to break a resistance at $5.23, the 61.8 percent projection level of an upward wave C from $5.01-1/4.
The resistance is strengthened by another similar one established by a falling trendline. The contract is likely to fall towards the zone of $5.09-1/2 to $5.14-1/2.
* 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.