SINGAPORE: Palm oil may test a support at 3,498 ringgit per tonne, a break below could open the way towards 3,418 ringgit.
The contract seems to be riding on a wave c, which carries the purpose of covering a gap forming on May 5. However, the support at 3,498 ringgit must not be ignored.
The support is supposed to be much stronger than the one at 3,563 ringgit, which triggered a decent bounce to about 3,707 ringgit.
A bounce may occur around 3,498 ringgit as well.
The current speculation is that the contract may fail to break 3,498 ringgit in its first attempt.
A break above 3,563 ringgit may lead to a gain to 3,627 ringgit.
On the daily chart, the contract broke a support at 3,556 ringgit.
It is expected to slide towards the lower support zone of 3,368 to 3,4545 ringgit. Such a slide would make a bullish inverted head-and-shoulders invalid.
Palm oil reverses losses on short covering
A doji formed on Monday, which is disregarded as a bullish reversal signal.
Rather, this pattern may only indicate a temporary hesitation of bears, after breaking the support of 3,556 ringgit. This doji will not be treated seriously unless the contract stands firm above 3,556 ringgit on Tuesday.
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