SINGAPORE: Palm oil may rise towards a 5,187-5,274 ringgit range, as it has broken a resistance zone of 5,032-5,048 ringgit per tonne.
The break confirms a continuation of a five-wave cycle from 4,032 ringgit.
The contract is riding on a wave 5, which is unfolding towards a range of 5,187-5,274 ringgit, as pointed by a rising channel.
The former resistance zone has become a strong support, which serves as a limit to any pullback.
A drop below 5,032 ringgit, however, will pose a serious challenge to the bullish view, as the drop may suggest the break above the zone was false.
On the daily chart, a projection analysis reveals a wider target range of 5,170-5,350 ringgit, formed by the 261.8% and the 276.4% projection levels of an upward wave (C) from 1,939 ringgit.
Both a flag and a rising trendline confirm this target zone.
The bulls' party may reach a climax in the zone, followed by a price reversal, as the rise from the Sept. 20 low of 4,032 ringgit looks too steep to sustain.
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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