SINGAPORE (Aug 7): Palm oil may break a support at 2,187 ringgit and drop to 2,149 ringgit per tonne, as suggested by its wave pattern and a projection analysis.
The support is provided by the 61.8 percent projection level on a downward wave C from 2,348 ringgit. The bounce triggered by the support at 2,149 ringgit developed into a flat which has ended at the Aug. 2 high of 2,233 ringgit.
The wave C has resumed towards 2,088 ringgit, its ultimate target. On the daily chart, palm oil has finished two pullbacks towards a resistance at 2,226 ringgit. It is falling towards 2,120 ringgit, the 100 percent projection level of a downward wave(C).
It must be noted that the downside will be rather limited. Plam oil may reverse its downtrend in the range of 2,088-2,120 ringgit.
A break above 2,218 ringgit, however, will signal the formation of a double-bottom around 2,149 ringgit, and a bullish target at 2,287 ringgit will be established. - Reuters