SINGAPORE: Palm oil may retest a support at 4,264 ringgit a tonne, a break below which could open the way towards 4,072-4,135 ringgit range.
The contract failed twice to break a resistance at 4,459 ringgit.
The failure confirmed the completion of a wave 5. A small double-top could develop around this level.
The pattern will suggest a target of 4,072 ringgit once palm oil breaks 4,264 ringgit.
It must be noted that the downside will not be limited to 4,072 ringgit, as the uptrend from 3,220 ringgit may reverse, when the contract falls below 4,264 ringgit.
A break above 4,459 ringgit could lead to a gain into 4,533-4,607 ringgit range. On the daily chart, the contract faces a strong resistance at 4,495 ringgit.
Its exhaustion around this barrier well fits into a bigger picture.
The chart pattern from the July 14 low of 3,489 ringgit looks like a big inverted head-and-shoulders.
The right shoulder is yet to unfold itself, which is expected to be roughly symmetrical to the left shoulder.