SINGAPORE: Palm oil may retest a support of 3,859 ringgit per tonne, a break below which could be followed by a drop to 3,708 ringgit. The contract has been well controlled by a set of retracements of the uptrend from 3,220 ringgit to 4,497 ringgit.
It could be riding on a wave C from 4,276 ringgit,which is expected to travel below 3,708 ringgit.
Key resistance is at 4,009 ringgit, a break above which could lead to a gain into a range of 4,196-4,276 ringgit.
On the daily chart, the contract still faces a resistance zone of 3,980-4,009 ringgit. The hammer on Feb. 10 is not regarded as a bullish reversal signal, as it is less effective in the middle of a fall.
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It could just be one of the common candlesticks, and will not be taken into consideration until the contract breaks the resistance zone.
A downward wave C from 4,276 ringgit is believed to have resumed. Strategically, the resumption will be confirmed when the contract breaks 3,859 ringgit.
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