SINGAPORE: Palm oil may bounce to 3,707 ringgit per tonne as it has stabilized around a support of 3,563 ringgit. The support is identified as the 50% retracement of a five-wave cycle from 3,288 ringgit.
A bounce has been triggered, which could be strong enough to cover a common gap forming on Thursday.
It is hard to categorize the following bounce, which could be a part of a deep correction from 3,837 ringgit or a continuation of the uptrend from 3,288 ringgit. Signals will become clearer after the contract gets out of a neutral range of 3,563 ringgit to 3,707 ringgit.
A break below 3,563 ringgit could open the way towards 3,418-3,498 ringgit.
On the daily chart, the contract found a support at 3,556 ringgit, which is near 3,563 ringgit (hourly chart). It is expected to test the resistance at 3,722 ringgit.
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Could the following bounce be a part of an inverted head-and-shoulders that developed from the April 17 low of 3,567 ringgit? The pattern may become valid, if palm oil keeps rising, until it breaks the key resistance at 3,857 ringgit.
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