SINGAPORE (Feb 22): Palm oil may break a support at RM2,780 per tonne and fall more towards the next support at RM2,750, as suggested by its wave pattern and a Fibonacci ratio analysis. These supports are identified, respectively, as the 238.2% and the 261.8 Fibonacci projection levels of a downward wave 3 from the Feb 15 high of RM3,075. Experience shows that a powerful wave 3 seldom ends around its 238.2% projection level. Most likely, this wave would extend to its 261.8% projection level. In case of palm oil, the 261.8% level is at RM2,750. A Fibonacci retracement analysis on the uptrend from the Aug 25, 2015 low of RM1,863 to the Dec 19, 2016 high of RM3,202 reveals a lower target at RM2,691, the 38.2% level. Resistance is at RM2,827 a break above which could lead to a gain into the range of RM2,856–2,874.

(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.)