The reversal followed a failure to break the resistance at 2,351 ringgit, the 300 percent projection level of an uptrend from 1,979 ringgit.
A gap forming on the hourly chart has been confirmed as an exhaustion gap, which generally appears at the end of a trend. It is hard to estimate the depth of the current drop. Theoretically, palm oil could fall to 2,134 ringgit, the bottom of a presumed wave B.
On the daily chart, the contract failed to break a resistance at 2,321 ringgit, the 76.4 percent projection level of a downward wave (C) from 2,896 ringgit. The failure has caused a loss towards 2,246 ringgit.
A break above 2,322 ringgit (first chart) could lead to a gain to 2,351 ringgit.
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Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.