SINGAPORE: Palm oil may test a resistance at 6,423 ringgit per tonne, as it has stabilized around a support at 6,220 ringgit.

The support is identified as the 61.8% retracement analysis on the rise from 5,926 ringgit to 6,698 ringgit. It is strengthened by a similar one of 6,233 ringgit.

Either the deep correction from 6,698 ringgit is over, or a temporary bottom has formed around these supports.

A break above 6,423 ringgit could lead to a gain into 6,516-6,577 ringgit range, while a break below 6,220 ringgit could cause a fall to 6,107 ringgit.

Palm oil may seek support around 6,220 ringgit

On the daily chart, there is no convincing signal that the drop from the May 27 high of 6,698 ringgit is over.

However, the downside could be very limited, as a rising trendline establishes a strong support at 6,115 ringgit which will be a floor to bears.

Signals on the hourly chart suggest a bounce towards 6,423 ringgit.

A further gain would indicate the continuation of the uptrend towards 7,229 ringgit, as pointed by the upper trendline.