SINGAPORE: Palm oil may retest a support at 5,984 ringgit per tonne, a break below which could open the way towards 5,843 ringgit.
The contract is riding on a wave c, which could either end around 5,984 ringgit, or extend to 5,615 ringgit, respectively its 61.8% and 100% projection levels.
This wave is supposed to consist of five smaller waves. So far only four waves have unfolded.
The wave 5 may start around 6,213 ringgit, to reverse the wave 4 and drive the price towards 5,615 ringgit.
Palm oil may rise to 6,602 ringgit
A break above 6,213 ringgit may lead to a gain to 6,354 ringgit.
On the hourly chart of August contract, palm oil eventually pierced below a support at 6,048 ringgit after failing twice to break this level.
Even though a bounce was triggered, it has little impact on the continuation of the downtrend from 6,873 ringgit.
On the daily chart, the gap forming between May 13 and May 17 signals an accelerated drop, even though the gap was due to a contract switch. It is clearer that a big flat is developing, which started at 7,268 ringgit.
This pattern indicates a drop towards 5,438 ringgit.
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