SINGAPORE: Palm oil may bounce to 3,707 ringgit per tonne as it has stabilized around a support of 3,563 ringgit. The support is identified as the 50% retracement of a five-wave cycle from 3,288 ringgit.
A bounce has been triggered, which could be strong enough to cover a common gap forming on Thursday.
It is hard to categorize the following bounce, which could be a part of a deep correction from 3,837 ringgit or a continuation of the uptrend from 3,288 ringgit. Signals will become clearer after the contract gets out of a neutral range of 3,563 ringgit to 3,707 ringgit.
A break below 3,563 ringgit could open the way towards 3,418-3,498 ringgit.
On the daily chart, the contract found a support at 3,556 ringgit, which is near 3,563 ringgit (hourly chart). It is expected to test the resistance at 3,722 ringgit.
Palm oil climbs for fifth day on supply worries
Could the following bounce be a part of an inverted head-and-shoulders that developed from the April 17 low of 3,567 ringgit? The pattern may become valid, if palm oil keeps rising, until it breaks the key resistance at 3,857 ringgit.
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