SINGAPORE: Palm oil may test a support at 3,761 ringgit per tonne, a break below which could cause a fall to 3,659 ringgit.

The contract briefly approached a strong resistance at 3,926 ringgit and then quickly dropped below a support at 3,844 ringgit.

This hit-and-run move signals a dissipation of the bullish momentum. The bounce from 3,495 ringgit may have completed. Over the next few days, the contract may retreat towards 3,495-3,659 ringgit range.

A break above 3,844 ringgit may lead to a gain limited to 3,926 ringgit. On the daily chart, a shooting star formed on Thursday, after the hanging man on Wednesday.

Both of them are bearish reversal patterns. When working together, they are more reliable. The historical high-low bottom pattern may be repeating.

Under this assumption, palm oil may retreat towards the rising trendline again.

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