The metal is riding on a wave C from the April high of $6,632.92. This wave is expected to travel into a wide range of $5,034-$5,635, formed by its 100% and 61.8% projection levels.
The support at the 50% level of $5,833 temporarily stopped this wave and caused a bounce. A retracement analysis on the uptrend from the January 2016 low of $4,318 to the June 2018 high of $7,348 reveals another support at $5,833 which has been working together with the support at $5,821.
The current bounce has briefly pierced above $6,007. It may extend into $6,191-$6,237 range before the downtrend resumes towards $5,833. A break above $6,237 may not lead to an impressive gain. Instead, the gain may be limited to $6,379.
A fall below the June 7 low of $5,740 could confirm the continuation of the wave C towards $5,475. The pattern from the Aug. 15, 2018 low of $5,773 looks like a head-and-shoulders on the daily chart. The right shoulder is developing towards $6,394 which is the left shoulder high.
However, the right shoulder may fail to reach this high, as it is not necessarily symmetrical to the left shoulder. A retracement analysis on the fall from $6,608.50 to $5,740 suggests the right shoulder may finish in a range of $6,174-$6,277, formed by the 50% and the 61.8% levels.
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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. **