SINGAPORE: Palm oil may retest a support of 3,859 ringgit per tonne, a break below which could be followed by a drop to 3,708 ringgit. The contract has been well controlled by a set of retracements of the uptrend from 3,220 ringgit to 4,497 ringgit.
It could be riding on a wave C from 4,276 ringgit,which is expected to travel below 3,708 ringgit.
Key resistance is at 4,009 ringgit, a break above which could lead to a gain into a range of 4,196-4,276 ringgit.
On the daily chart, the contract still faces a resistance zone of 3,980-4,009 ringgit. The hammer on Feb. 10 is not regarded as a bullish reversal signal, as it is less effective in the middle of a fall.
Palm oil posts weekly gain on export surge
It could just be one of the common candlesticks, and will not be taken into consideration until the contract breaks the resistance zone.
A downward wave C from 4,276 ringgit is believed to have resumed. Strategically, the resumption will be confirmed when the contract breaks 3,859 ringgit.