SINGAPORE: Palm oil may retest a support of 3,859 ringgit per tonne, a break below which could result in a drop to 3,708 ringgit. The contract could be riding on a wave C from 4,276 ringgit,which is expected to travel below 3,708 ringgit - the 61.8% retracement of the uptrend from 3,220 ringgit to 4,497 ringgit.
The bounce triggered by the support on Jan. 25 adopted a flat pattern, which is expected to be followed by a deep drop. A break below 3,859 ringgit could confirm the target of 3,708 ringgit, while a break above 4,009 ringgit may lead to a gain to 4,196 ringgit. On the daily chart, the contract faces a resistance zone of 3,980-4,009 ringgit.
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The two black candlesticks on Feb. 10 and Feb. 13 illustrate the weakness of the market. A break above this zone seems unlikely. Instead, palm oil may retest the support zone of 3,859-3,888 ringgit, a break below which could be followed by a drop into a range of 3,708-3,796 ringgit.
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