Palm oil may retreat into 4,331-4,393 ringgit range
- The gap appeared while a wave 5 was developing. It looks like an exhaustion gap, signalling a completion of the five-wave cycle from the April 30 low of 3,865 ringgit.
SINGAPORE: Palm oil may retreat into a range of 4,331 ringgit to 4,393 ringgit per tonne, to fill a gap forming on May 12.
The gap appeared while a wave 5 was developing. It looks like an exhaustion gap, signalling a completion of the five-wave cycle from the April 30 low of 3,865 ringgit.
The correlation between palm oil and the US grain markets also suggests a drop on Monday, after grains dropped so much. Most likely, palm oil would open low and close low.
On the daily chart, the contract faces a strong resistance zone of 4,486 ringgit to 4,576 ringgit, formed by the 2008 high and a 161.8% projection level.
Either of these levels could work as a strong barrier to trigger a decent correction.
The doji forming on May 12 is a convincing bearish reversal signal, suggesting a fall towards 4,301 ringgit.
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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