Palm oil may test support at RM2,224

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SINGAPORE (Aug 23): Palm oil may test a support at RM2,224 per tonne, a break below which could cause a loss to the next support at RM2,192.

These supports are identified respectively as the 23.6% and the 14.6% retracements of the downtrend from RM2,498 to RM2,140.

The current fall could be a part of a flat from the Aug 8 high of RM2,265, or a resumption of the downtrend from RM2,498. It does not look like a pullback towards a falling trendline.

The contract has cleared a resistance at RM2,240, the 38.2% projection level of an upward wave C from RM2,192. This wave is capable of travelling into the range of RM2,269-2,317. A double-bottom forming around RM2,140 suggests a target around RM2,317 as well.

Signals on the daily chart turned bearish as well, as palm oil failed twice to break a resistance at RM2,262, the 76.4% projection level of a downward wave (C) from RM2,855.

This wave (C) looks incomplete. It is expected to end around RM2,079. Resistance is at RM2,255, 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.)