SINGAPORE: Palm oil may stabilize around a support at 3,900 ringgit per tonne, and test a resistance at 4,090 ringgit thereafter.
Due to the completion of a five-wave cycle from 6,698 ringgit, the contract is expected to bounce towards the peak of the wave 4 in the range of 4,896-5,086 ringgit.
The bounce would consist of three waves.
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The current wave b may end around the support of 3,900 ringgit, to be reversed by the wave c.
A break below 3,900 ringgit could trigger a drop into 3,592-3,782 ringgit range. On the daily chart, the long-shadowed hammers on July 6 and July 7 formed a strong reversal pattern, confirming the completion of a five-wave cycle.
This reversal pattern will keep valid until the contract falls through the July 6 low of 3,735 ringgit.
The lower shadows of the hammers are expected to provide strong supports, preventing a drop below 3,735 ringgit.
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