SINGAPORE (Aug 28): Palm oil may test a support at RM2,192 per tonne, a break below which could cause a loss into the range of RM2,140-2,165.
The support is identified as the 14.6% retracement of the downtrend from RM2,498 to RM2,140. The current fall was thought to be the third part of a flat pattern from the Aug 8 high of RM2,265. Under this scenario, the drop may end around RM2,192.
However, this presumed flat may turn out to be a double-top, which suggests a target below RM2,140. This double-top is highly likely to be confirmed, as an intact falling trendline indicates the downtrend has not reversed.
On the daily chart, palm oil is going to test a support at RM2,185, the 86.4% projection level of a downward wave (C) from RM2,855.
A break below the support could cause a loss to RM2,079. Resistance is at RM2,224, a break above which may lead to a gain to RM2,277.
(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.)