Palm oil may end drop in 3,173-3,221 ringgit range

SINGAPORE: Palm oil may end its drop in a support zone of 3,173-3,221 ringgit per tonne, and start a strong bounce thereafter.

After the successive falls over the past few days, there is not much room at the downside. Wave pattern suggests the progress of a wave 5, which may end in the target zone if it is roughly equal to the wave 1.

The hourly RSI has been much over-sold and formed bullish divergence. It suggests an exhaustion of the fall. There is another support zone of 3,182-3,200 ringgit, formed by two horizontal lines. It will help stop the drop as well.

A break above 3,300 ringgit will be regarded as the very early signal that the bounce starts. Target range will be from 3,348 ringgit to 3,426 ringgit.

On the daily chart, a spinning top formed around a support at 3,274 ringgit on Monday. Even though it proved to be a failed reversal signal, it does suggest the fall is ending.

The contact is still likely to pierce below 3,274 ringgit. However, it is unlikely to fall deeply to 3,136 ringgit.

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