SINGAPORE (Aug 3): Palm oil is expected to drop to RM2,149 per tonne, following its failure to break a resistance at RM2,218.
The resistance is provided by the 50% projection level on a downward wave C from RM2,348. The failure of the contract to overcome this barrier confirms the completion of a flat that developed from its July 13 low of RM2,144. The wave C has resumed towards RM2,088.
On the daily chart, the flat seems to be made of two pullbacks towards a resistance at RM2,226, the 86.4% projection level of a downward wave C.
A break above RM2,218, however, will signal the formation of a double-bottom around RM2,149, and a bullish target at RM2,287 will be established.
(Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own. No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.)