The bounce consists of three waves that developed within a wedge. The third wave labelled c is shorter than the first wave labelled a, as revealed by a projection analysis.
Such a relation indicates a cautious market sentiment. A retracement analysis on the fall from $4.79-3/4 to $4.26 marks a support at $4.33-3/4, the 14.6 percent level, a break below which could confirm the wedge as a bearish continuation pattern.
On the daily chart, wheat fell below $4.38-1/4, the 100 percent projection level of a downward wave C from $5.40-1/4. The fall makes a target at $4.52 looks unreachable. Most likely, wheat could dip towards $4.23-1/4.
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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. **