SINGAPORE (Aug 27): Palm oil still targets RM2,192, as it has broken a support at RM2,224 per tonne.
The support is identified as the 23.6% retracement of the downtrend from RM2,498 to RM2,140. The next support will be at RM2,192.
The current fall could be a part of a flat pattern from the Aug 8 high of RM2,265. Under this scenario, the drop may end around RM2,192.
There is a more bearish scenario that the downtrend from RM2,498 has resumed. In this case, palm oil could revisit the low at RM2,140.
A break above a falling trendline proved to be false. This false break suggests that the downtrend from RM2,498 remains intact.
On the daily chart, palm oil failed twice to break a resistance at RM2,262, the 76.4% projection level of a downward wave (C) from RM2,855.
The failure has caused a drop towards the support at RM2,185. A further drop could be extended to RM2,079, the 100% projection level of a downward wave (C).
Immediate resistance is at RM2,240, the 38.2% projection level of a presumed wave C from RM2,192. A break above this resistance 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.)