The rebound is due to a completion of a five-wave cycle on the fall from 3,144 ringgit to 2,917 ringgit, and often, the 38.2 percent Fibonacci retracement proves to be the maximum high the first round of a rebound can reach.

In the case of palm oil, the 38.2 percent retracement lies on the 3,004 ringgit level, which could force the contact to fall back to the presumed wave "b" trough at 2,924 ringgit.

Copyright Reuters, 2010