CBOT wheat is expected to end its rebound at or below $7.48 per bushel, and then fall towards $6.24-3/4 over the next three months, as indicated by a Fibonacci retracement analysis. The rebound was triggered by a support at $5.48-1/2, the 76.4 percent Fibonacci retracement on the rise from the June 9, 2010 low of $4.25-1/2 to the July 23, 2012 high of $9.47-1/4.
The downtrend from $9.47-1/4 is a five-wave cycle, which indicates it has not completed and may eventually extend below $5.50, the January 29 low. Wheat has broken two resistances without decent corrections. They were at the 61.8 percent retracement of $6.24-3/4 and the 50 percent retracement of $6.86-1/2. Such a linear rise can hardly sustain, especially when the rebound is approaching a stronger resistance at $7.48, the 38.2 percent retracement.
This resistance will be strengthened by another one at $7.48-1/2, the 50 percent retracement on the fall from the $9.47-1/4 to $5.50. A break above $7.48-1/2 could trigger a further gain to $7.95-1/2, the 61.8 percent retracement. A break below $6.86-1/2 could be the very first signal to suggest the completion of the rebound. 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.
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