SINGAPORE: Palm oil may test a resistance at 3,834 ringgit per tonne, a break above which could lead to a gain to 3,888 ringgit.
The pattern from the Jan. 6 high of 3,888 ringgit looks like a big flat, which consists of three waves that are roughly equal in length.
The current wave B could travel to around 3,888 ringgit, where the wave A started. This wave B will be reversed by a downward wave C.
Besides this bearish scenario, there is a bullish one that the uptrend from 2,691 ringgit has resumed. Under this assumption, the contract would surge far above 3,888 ringgit.
Support is at 3,752 ringgit, a break below which could cause a fall into the 3,624-3,673 ringgit range. On the daily chart, the contract has broken a resistance at 3,581 ringgit.
The break opened the way towards 3,856 ringgit. Given that palm oil started a deep correction when it briefly pierced above this level on Jan. 6, it may experience a much shallower correction when it rises to 3,856 ringgit.
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