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Palm oil may bounce into 3,592-3,631 ringgit range before falling

  • On the daily chart, the drop triggered by the key resistance at 3,856 ringgit looks so decent that it suggests a completion the wave C from 2,691 ringgit.
Published January 15, 2021

SINGAPORE: Palm oil may bounce moderately into a range of 3,592-3,631 ringgit per tonne, before falling again.

The contract seems to have temporarily stabilised around a support at 3,504 ringgit, as indicated by two hammers. This support is strengthened by another one at 3,502 ringgit, the Dec. 29, 2020 low.

Chances are high that a moderate bounce will occur on Friday. A break below 3,504 ringgit could open the way towards the 3,381-3,426 ringgit range.

The bounce looks like a pullback towards a resistance at 3,581 ringgit on the daily chart, which is the 76.4% projection level of an upward wave C from 2,691 ringgit.

The depth of the fall from the Jan. 6 high of 3,888 ringgit strongly suggests a completion of a wave C from 2,691 ringgit. The contract may resume its fall towards 3,411 ringgit, after completing the weak bounce.

The purpose of the correction could be to cover a gap forming between Dec. 31, 2020 and Jan. 4. A more bearish scenario indicates the completion of a five-wave cycle from the Oct. 2, 2020 low of 2,691 ringgit.

Under this scenario, the correction could be towards the bottom of the wave 4 around 3,200 ringgit. Resistance is at 3,757 ringgit, a break above which could lead to a gain to 3,835 ringgit.

On the daily chart, the drop triggered by the key resistance at 3,856 ringgit looks so decent that it suggests a completion the wave C from 2,691 ringgit.

Unless the contract could stabilise around 3,698 ringgit and resume its rise towards 3,856 ringgit, a further fall towards the 3,411-3,581 ringgit range will be highly likely.

Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.

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