SINGAPORE: Palm oil may test a resistance at 2,254 ringgit per tonne, a break above which could lead to a gain to 2,284 ringgit.
The resistance is identified as the 14.6% retracement on the uptrend from 1,916 ringgit to 2,312 ringgit. The strong recovery of the price from the Sept. 5 low of 2,163 ringgit signals a completion of the correction from the Aug. 26 high of 2,312 ringgit.
However, it is not very clear if this correction would extend or if the uptrend from 1,916 ringgit has resumed. Only a rise above 2,312 ringgit could confirm the resumption. An extended correction would mean palm oil revisits the low at 2,163 ringgit.
A break below 2,219 ringgit may cause a fall to 2,185 ringgit. On the daily chart, the contract may have completed a pullback towards a trendline and a support at 2,219 ringgit, the 23.6% retracement on the downtrend from 3,202 ringgit to 1,916 ringgit. It is expected to hover above 2,219 ringgit or climb towards 2,312 ringgit(hourly chart).
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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.