A five-wave cycle from $5.32-3/4 could have ended around a support at $4.64, the 200 percent projection level of a bigger wave C from $5.34-3/4.
The bullish divergence on the hourly RSI provides a convincing signal that the downtrend became exhausted and may not extend further. At least, wheat could hover above $4.64 for one or two days. A falling trendline suggests a target around $4.77-1/4.
A break below $4.63-3/4 may cause a loss limited to $4.58-1/2. On the daily chart, a projection analysis reveals a strong support at $4.69-3/4, the 61.8 percent projection level of a downward wave C from $5.44-1/4.
After piecing below this support, wheat failed to fall further to $4.52. The failure indicates that the break below $4.69-3/4 could be false, and the contract may climb above this level again.
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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. **