Palm oil may fall to 2,390 ringgit in Q4

SINGAPORE: Palm oil could fall to 2,390 ringgit a tonne this quarter, as suggested by its wave pattern and a projection analysis.

The sharp rally from the May low of 1,939 ringgit has ended, as confirmed by a shooting start forming in September.

The rally could be a part of a flat pattern developing from the July 2019 low of 1,916 ringgit.

This wave count presents a rather bearish outlook in the fourth quarter and next year, as a big wave C could have started, unfolding towards 1,057 ringgit, its 100pc projection level.

This bearish outlook will be revised under two conditions. One is that the contract ends its drop around 2,390 ringgit and climbs above 2,762 ringgit subsequently.

The other will be a quick rise above 3,104 ringgit from the current level, as such a rise could be extended towards 3,967 ringgit.

Before falling towards 2,390 ringgit, palm oil may bounce moderately towards 2,829 ringgit, the 23.6pc retracement on the uptrend from 1,939 ringgit to 3,104 ringgit on the daily chart.

This uptrend has been driven by a wave C, which could be well broken down into five smaller waves.

The 61.8pc projection level of the wave C at 2,702 ringgit triggered a pullback towards a rising trendline. This pullback may end around 2,829 ringgit.