SINGAPORE: Palm oil may test a support at 3,796 ringgit per tonne, a break below which could open the way towards 3,693 ringgit. The contract has broken a support at 3,888 ringgit.
The next support will be at 3,796 ringgit, the 61.8% projection level of a wave C from 4,276 ringgit.
This wave is capable of travelling to 3,500 ringgit. It is unlikely to complete around 3,888 ringgit, in view of its strong momentum.
A break above 3,888 ringgit may lead to a gain to 3,980 ringgit.
On the daily chart, the drop shows no sign of completion.
It may extend into a range of 3,522-3,647 ringgit. The drop may make a part of the right shoulder of an inverted head-and-shoulders.
Palm oil falls for second week on firmer ringgit
However, the right shoulder begins to look unsymmetrical to the left shoulder, thus casting some doubt on the validity of this reversal pattern.
The tricky part is that it is still too early to assume the resumption of the downtrend from 7,229 ringgit.
A favoured scenario could be that the contract is undergoing a corrective wave cycle, with the current wave B to complete around 3,647 ringgit.
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