SINGAPORE: Palm oil may test a support zone of 3,994-4,019 ringgit a tonne, a break below which could open the way towards 3,992 ringgit.
The drop from the Thursday high of 4,219 ringgit looks deep enough to confirm a reversal of the short uptrend from the Nov. 21 low of 3,787 ringgit.
The development of this trend was largely due to a support at 3,847 ringgit. With the contract having failed to break a resistance at 4,177 ringgit, it is reasonable to assume the rise is over.
A break above 4,128 ringgit could lead to a gain into 4,177-4,236 ringgit range. On the daily chart, the shooting star on Thursday put an end to the preceding consecutive gains.
Palm oil may retest resistance at 4,128 ringgit
The pattern suggests a drop on Friday. The drop could be classified as a part of the right shoulder of an inverted head-and-shoulders. This shoulder is supposed to extend to about 3,522 ringgit.
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