SINGAPORE: Palm oil may keep hovering below a strong resistance at 3,916 ringgit per tonne, or retrace towards 3,686 ringgit, as suggested by its wave pattern and a retracement analysis.
The bounce from 3,481 ringgit may have been driven by a wave d, which is of same degree to the wave b from the Aug. 19 low of 4,000 ringgit. Five waves make up the downtrend.
A falling channel imposes a limit of 3,916 ringgit to the wave d.
The fifth wave, labelled e, is expected to start around this level and travel towards 3,418 ringgit. Strategically, the target of 3,686 ringgit will be confirmed when the contract breaks 3,813 ringgit.
Palm oil may hover below 3,916 ringgit
A break above 3,916 ringgit could lead to a gain to 4,018-4,145 ringgit.
On the daily chart, the contract is facing a similar resistance at 3,891 ringgit, which works together with the one on hourly chart to force the contract to retrace towards 3,647 ringgit.
The doji on Wednesday signals a weakness of the market, which may find it much easier to fall towards 3,647 ringgit than to rise towards 4,070 ringgit.