SINGAPORE: Palm oil is expected to test a support at 3,796 ringgit per tonne, a break below which could be followed by a drop into a range of 3,683-3,721 ringgit.
So much of the bounce from 3,721 ringgit has been reversed that the downtrend from 4,276 ringgit could have resumed. The trend is riding on a wave C from 4,276 ringgit, which is capable of travelling to 3,500 ringgit.
A stabilisation of the contract around 3,796 ringgit may signal an extension of the bounce and the formation of a small inverted head-and-shoulders.
Resistance is at 3,888 ringgit, a break above which could lead to a gain to 3,980 ringgit. Such a gain would confirm the extension of the bounce towards 4,093 ringgit.
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On the daily chart, the big black candlestick on Tuesday suggests a further fall on Thursday, towards 3,683-3,708 ringgit which triggered the bounce to the Jan. 30 high of 3,991 ringgit.
It might be safe to assume the continuation of a wave C from 4,276 ringgit, towards its ultimate target of 3,500 ringgit.
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