SINGAPORE: Palm oil is biased to fall to 3,859 ringgit per tonne, as it may be affected by the drop in the overnight COBT grain market. These products have a positive correlation.
While palm oil looks sideways in the range of 3,859-4,009 ringgit, the fall of grains suggests a downside bias. A break below 3,859 ringgit could be followed by a further drop towards 3,708 ringgit.
A break above 4,009 ringgit may open the way towards 4,196 ringgit.
On the daily chart, the contract is sandwiched between two narrow price bands.
From Feb. 9, black candlestick outnumbers white ones. Based on this construction, it won’t be hard to form a bearish view.
For trading purpose, a prediction may remain valueless until the contract gets out of the range of 3,859-4,009 ringgit, as the following move could be strong and lasting, regardless of its direction.