SINGAPORE: Palm oil may stabilize around a support of 3,584 ringgit per tonne in the next quarter, and rise into a range of 4,280-4,604 ringgit thereafter.
A five-wave cycle from the April high of 7,229 ringgit has completed around a support of 3,197 ringgit, as confirmed by the strong surge from the September low of 3,220 ringgit.
The bounce may consist of three waves.
So far, only the first wave, the wave a, has completed.
The wave b is unfolding towards a range of 3,197-3,548 ringgit range, as it has travelled below a support of 3,975 ringgit.
The wave b is likely to end around 3,584 ringgit, as it is expected to be roughly symmetrical to the rise from the July low of 3,489 ringgit.
A break below 3,584 ringgit could open the way towards 3,197 ringgit.
The contract could then be confined within a range of 3,197-3,975 ringgit.
The pattern from 3,489 ringgit looks like an inverted head-and-shoulders, which is a typical bottom pattern, suggesting a reversal of the downtrend from 7,229 ringgit.
A detailed study on the daily chart suggests an ending point of the right shoulder in the range of 3,521-3,708 ringgit, formed by the 76.4% and the 61.8% retracement of the wave a. Generally, the right shoulder may not be that symmetrical to the left shoulder.
The target zone of 3,521-3,708 ringgit has to be aborted once palm oil breaks the nearest resistance at 4,009 ringgit.
The break will not only lead to a gain into 4,196-4,497 ringgit range, but also suggest a completion of the right shoulder.
Comments
Comments are closed for this article.