SINGAPORE: Palm oil may test a resistance at 5,676 ringgit per tonne, a break above which could lead to a gain into the 5,749-5,794 ringgit range.
The contract is riding on an extended wave 5, which consists of five smaller waves. The powerful wave 5-3 is unfolding. The strong surge on Jan. 28 confirmed this wave.
This wave 5-3 could be much longer than the wave 5-1, to travel far above 5,676 ringgit. An estimated target zone will be from 5,868 ringgit to 5,986 ringgit.
A realistic target could be either 5,749 ringgit or 5,794 ringgit. Support is at 5,608 ringgit, a break below which could cause a fall into the 5,484 ringgit to 5,558 ringgit range.
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A correction from the current level may be limited to 5,425 ringgit. On the daily chart, palm oil is near a resistance zone of 5,641-5,821 ringgit.
Resistances established by the trendline have proved to be effective in triggering deep drops.
Whether the trendline could cause another one is still subject to further observation.
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