SINGAPORE (June 21): Palm oil is biased to retest a resistance at RM2,068 per tonne, as suggested by a retracement analysis and a developing double-bottom.
The resistance is provided by the 38.2% retracement on the downtrend from RM2,235 to RM1,964. Working together with this resistance is another one established by a falling trendline.
Even though palm oil failed twice to overcome these barriers, the pattern from the May 13 low of RM1,960 seems to be taking the shape of a double-bottom.
Based on this pattern, palm oil is highly likely to rise to RM2,100. Support is at RM2,004, a break below which could cause a loss to RM1,964.
On the daily chart, signals look neutral as palm oil is stuck in a range of RM2,001-2,046, formed by the 76.4% and the 61.8% projection levels of a downward wave C from RM2,235. The bias could be towards the upside.
(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.)