SINGAPORE: Palm oil may break a support at 1,933 ringgit per tonne and fall towards the next support at 1,634 ringgit in the third quarter.
These supports are identified as the 61.8% and the 76.4% projection level of a downward wave C from the December 2016 high of 3,202 ringgit. It is the third wave of a presumed three-wave cycle from the February 2011 high of 3,967 ringgit.
Five smaller waves make up the wave C. The fifth wave labelled 5 is unfolding towards 1,634 ringgit, as pointed by a falling trendline. A head-and-shoulders suggests the same target as well.
The support at 1,933 caused a strong bounce in November 2018. It is not very clear if a weaker bounce would occur around this level. A fall below the August 2015 low of 1,863 ringgit could confirm a break below 1,933 ringgit and the target at 1,634 ringgit.
A detailed analysis on the downtrend from 3,202 ringgit on the weekly chart reveals a similar support at 1,936 ringgit, the 123.6% projection level of the trend from 2,896 ringgit. It is highly likely that palm oil fails to break these two supports in its first attempt and then consolidates above 1,933 ringgit.
Resistance is at 2,065 ringgit, a break above which could lead to a gain limited to 2,119 ringgit. A further surge above 2,119 ringgit, however, could signal the extension of the wave 4 towards 2,302 ringgit.
* Charts are not available in reports received in email box through "Alert". To get charts, use the news code of to retrieve the original reports.
** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
** No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.
Comments
Comments are closed for this article.