SINGAPORE: Palm oil may drop into a range of 3,801-3,834 ringgit, following its failure to break a resistance at 3,959 ringgit per tonne.

The contract pierced above the Jan. 6 high of 3,888 ringgit. Thanks to this move, the uptrend from the May 6, 2020 low of 1,939 ringgit has been confirmed.

However, the contract shows signs of weakness after the strong surge on Monday, as the surge was followed by a sideways move.

The weakness indicates a drop towards the big gap, which is likely to be partially or totally filled on Tuesday.

A break above 3,929 ringgit could lead to a gain to 4,008 ringgit. On the daily chart, the doji forming on Monday signals an exhaustion of the rally as well.

It happened to appear around a short rising trendline.

This is no coincidence, as resistances also build up along the trendline. A break above 3,938 ringgit could signal the continuation of the uptrend towards 4,301 ringgit.

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