SINGAPORE: Palm oil may fall to 3,853 ringgit per tonne, following its failure to break a resistance at 3,963 ringgit. The resistance is identified as the 50% retracement of the downtrend from 4,425 ringgit to 3,500 ringgit.
The failure to overcome this barrier suggests two possibilities.
One is a pullback towards a falling trendline while the other a continuation of the downtrend from 4,425 ringgit. In the case of a pullback, market may resume its rise around 3,853 ringgit.
A break above 3,963 ringgit could open the way towards 4,006 ringgit.
On the daily chart, the strong bounce triggered by the support at 3,521 ringgit could be considered as a pullback towards a rising trendline.
This pullback theory could be the most satisfactory explanation to the stop of the bounce around the trendline.
Palm oil may gain further to 3,963 ringgit
A break above this line may not lead to a big gain, as the contract will face a resistance at 4,009 ringgit.
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